Blog Coverage Nidec to Acquire Emerson’s Motor Divisions for $1.2 Billion

LONDON, UK / ACCESSWIRE / August 3, 2016 / Active Wall St. blog coverage looks at the headline from Emerson Electric (NYSE: EMR) and Nidec Corp. In a bid to expand its customer base in Europe and North America, Japanese major Nidec Corp. that supplies electronic appliance makers such as Apple Inc., has agreed to buy Emerson Electric (NYSE: EMR) in an all-cash deal for $1.2 billion on August 2, 2016. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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The deal includes France-based Leroy Somer Holding and businesses based in the U.K., U.S., China and India, Nidec said, in a statement. Nidec purchased other divisions of St. Louis-based Emerson in 2010. The formalities of the deal are expected to be completed by the end of the 2016 following regulatory approvals.

The 43-year-old Nidec has its products in hard-disk drives, electric appliances, automobiles and commercial and manufacturing equipment. The company has the largest global market share for the tiny spindle motors that power hard-disk drives. As of 2015, the company has 230 subsidiary companies located across Japan, Asia, Europe, and the Americas. Nidec also featured on the 2014 Forbes World’s most innovative companies list. Meanwhile, Emerson manufactures products and provides engineering services for a wide range of industrial, commercial, and consumer markets.

Targets in reach

As per The Kyoto, Japan-based Company, joining hands with Emerson will help Nidec inch in closer to its 2016’s mid-term target of 2 trillion yen ($20 billion) in sales compared to 2015’s 1.178 trillion yen. Nidec’s 71 year-old billionaire owner, Shigenobu Nagamori, has announced deals worth about $2.9 billion since 2000 and has been successful in adding more than 40 companies under its wing. In February 2010, Nidec acquired Motors & Controls business from Emerson. Since then, Nidec added Ansaldo Sistemi Industriali S.p.A., in June 2012, Avtron Industrial Automation, Inc., and Kinetek Group Inc., both in September 2012 among others.

Seagate Technology and Western Digital are Nidec’s two most important clients.

Spreading wings in regional market

The merger will help Nidec in capturing the regional markets where its presence is a bare minimum and is less popular as an industrial motor and electric power generation brand. The firm hopes that the marriage of the two firms would also result in increasing its market presence in the Asian region.

There has been a slump in recent performances as a result of the significant drop in oil prices and weak macro-economic conditions; however, Nidec expects business to grow as the cycle recovers and as synergies are realised in a mid- to long-term perspective.

J.P. Morgan Securities LLC and Centerview Partners LLC were the financial advisers for Emerson in regards to the deal.

Earnings Release

Emerson released its third quarter 2016 results on August 02, 2016, before the opening bell. The company reported net sales were down 7% in the third quarter, with underlying sales down 5% excluding unfavourable currency translation and an impact from a divestiture, net of acquisitions of 1 percent each. Emerson’s sales declined across the board, except for its Network Power division which was up 8% on the back of strong data center and telecommunications infrastructure spending.

Stock Performance

Following the announcement and the subsequent earnings release from Emerson, the company’s stock price slumped 4.93% on August 2, 2016 to $53.03 per share. A total of 7.53 million shares were traded, which was higher than the 3 months average volume of 3.56 million shares. The company’s shares have advanced 13.01% since the beginning of the year.

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