Emerson to Spin off Network Power Business

June 30, 2015 by Jeff Shepard

Emerson plans to spin off its Network Power business via a tax-free distribution to shareholders as part of a plan to streamline its portfolio, drive growth, and accelerate value creation for shareholders. Emerson will also explore strategic alternatives for its motors and drives, power generation and remaining storage businesses. In addition, the company will conduct a complete review and assessment of its corporate services and structure to bring them into alignment with its smaller scale and sharper focus.

The spin off of Network Power will result in two separate, industry-leading companies with distinct strategies and investment profiles. Following completion of all actions, Emerson will continue to be a global leader in bringing technology and engineering together to provide solutions for customers in the process, industrial, commercial and residential markets. These actions offer significant opportunities for enhanced growth, profitability, cash flow, and returns to shareholders.

As a publicly traded company, Network Power will be the world’s leading, stand-alone provider of thermal management, ac and dc power, transfer switches, services and infrastructure management systems for the data center and telecommunications industries. Network Power will have significant product breadth, including a large portfolio of intelligent, rapidly deployable hardware, software and service solutions for power, thermal and infrastructure management. Network Power will be well positioned for further growth with increased flexibility and speed to market that will allow it to better respond to evolving market dynamics and customer needs.

“Emerson has a proven record of taking decisive actions to enhance shareholder value while providing an unmatched level of service to customers around the world,” said Chairman and Chief Executive Officer David Farr. “We are aligning ourselves with the changing global marketplace and our customers’ evolving needs to drive Emerson and Network Power forward. Creating two, independent companies will position both businesses to continue as leaders and to pursue distinct strategies to drive profitable growth. Emerson and Network Power will each have sharper strategic focus, enabling both companies to better allocate resources, incentivize employees and allocate capital to capture the significant long-term opportunities in their respective markets.”

The various transactions are expected to be substantially completed by September 30, 2016. Additional information on structure, management, governance and other significant matters for the Network Power separation will be provided at a later date. The Network Power separation transaction will not require approval from Emerson shareholders.

With regard to the plan to evaluate a broad range of alternatives for the motors and drives, power generation and remaining storage businesses, there can be no assurance that the strategic review process will result in any transaction. The company does not intend to comment further regarding the review process until any specific transaction is approved by the Board of Directors or the review process is concluded.