Rockwell Automation rejects $27 billion takeover bid

Posted on 2 Nov 2017 by Michael Cruickshank

US industrial automation systems manufacturer Rockwell Automation has announced that it has rejected a significant takeover bid from a rival.

Robotics and connected industrial control systems are growing in importance. Image courtesy of Wikipedia.
Robotics and connected industrial control systems are growing in importance. Image courtesy of Wikipedia.

According to a statement released by the company, it rejected a takeover bid worth $27bn from another US rival, Emerson Electric.

The bid called for the complete acquisition of Rockwell Automation for a price of $107.50 per share in cash and 225 million shares of Emerson common stock.

This bid followed an earlier unsolicited bid in August, where the company would be purchased at $200 a share with a different stock split.

Following consideration, the bid was unanimously rejected by Rockwell Automation’s board, which viewed it as not in the best interests of the company or its shareholders.

“The Rockwell Automation Board of Directors and management team are committed to serving the best interests of the Company and Rockwell Automation shareowners, and are confident in the Company’s strategic direction and our ability to continue delivering superior levels of growth and value creation,” said Blake D. Moret, CEO of Rockwell Automation.

While the specific reasons for the rejection of the bid are currently unclear, it is likely that Rockwell Automation believes it can receive a higher price for its company.

Currently, there is a massive shift in the manufacturing industry towards automated production and connected factory systems.

Known as Industry 4.0, this shift will be a significant boon for companies like Rockwell which build the systems which will be used in the factories of the future.

Rockwell markets control systems, industrial control components, information software, motor control devices, sensing devices for factories, as well as associated services such as information and network security.

For this reason, the company is seen an attractive purchase, and this industry shift was likely the basis for Emerson’s takeover bid.

Rockwell Automation’s stock soared by more than 5% on the news going public reflecting the company’s high value to potential buyers.

Additionally, the announcement of this rejection has spurred intense speculation that several conglomerates will now enter a bidding war over the company, causing a further inflation of its stock price.