Nidec to Acquire Emerson Electric’s Motors, Drives and Electric Power Generation Businesses

Nidec Corporation announced that it entered into an asset and stock purchase agreement with Emerson Electric Co. on August 2, 2016, to acquire the motors, drives and electric power generation businesses of Emerson. The purchase price is US$1,200 million (on a cash and debt-free enterprise value basis), and the consolidation will be all cash. Major acquirees and locations included in this transaction are; Leroy-Somer Holding (France), Control Techniques Limited (UK), Emerson Industrial Automation USA LLC (USA), Kato Engineering Inc. (USA), Leroy Somer Electro-Technique (Fuzhou) Co., Ltd. (China), and Emerson Industrial Automation Electric Power Generation Private Ltd. (India). Total numbers of employees count 9,703 at the time of October 1, 2015.

According to Nidec, the Emerson's business has a strong brand, solid business foundation, and excellent customer base, particularly in Europe and North America. The business has experienced a cyclical decline in recent performance as a result of the significant drop in oil prices and weak macro-economic conditions. However, Nidec expects the Emerson's business to grow as the cycle recovers and as synergies are realized in the mid- to long-term perspective. Expected synergies include (1) complimentary product fit with full lineup in industrial products and geographic fit, and (2) enhancement of proposal to customers by combining the Emerson's drives with Nidec's existing products.

For complementary product fit and geographic fit, Nidec claims the transaction helps combine Nidec's current NEMA-based (primarily North American market) industrial design platform with Emerson's IEC platform, providing cross-selling opportunities in all world regions. Second, Nidec's strength in medium-voltage generators with power output of 10 megawatts and above, combined with the Emerson's offering of low- and medium-voltage generators with a capacity of below 10 megawatts, significant brand name, and market presence, will enable Nidec to better serve customers' needs. Third, the transaction provides Nidec with access to Emerson's solid customer base in Europe and North America, the regional markets where Nidec is much less recognized as an industrial motor and electric power generation brand. Nidec also expects the transaction will contribute to increasing market presence in Asia.

For enhancement of proposal to customers, the transaction combines Nidec's medium-voltage drives (motor controls) and the Emerson's low-voltage drives, industry-leading technologies and product lines, enhancing Nidec's product lineups and competitive position. While Emerson's drives product line primarily targets the factory automation and machine control markets, Nidec has a strong foothold in the HVAC and flow-control pump markets in North America. The Emerson's business includes state-of-the-art technology for elevator drives, allowing Nidec to pursue the opportunity to sell Nidec's existing elevator motors and Emerson's drives as a package. In the European and Chinese markets, Nidec expects synergies in the sale of the Emerson's wind generation (blade) pitch controller application and Nidec's encoders and motors as an integrated module.

Furthermore, Nidec plans to continue to expand its business into the market for new-generation motion control, automated guided vehicle (AGV), and robotics, taking advantage of the Emerson's full range of servo-motors and gears.

In February 2010, Nidec acquired Motors & Controls business, currently Nidec Motor Corporation (NMC), 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 to enhance its industrial and commercial business.

Keywords: Motors, Drives, Electric Power Generation, Industrial Products, Medium-Voltage Drives, Low-Voltage Drives, ARC Advisory Group.