Emerson Electric is making another run at acquiring UK company Chloride Power, making a $1.1 billion offer to combine two leading makers of uninterruptible power supply (UPS) equipment. The deal was promptly rejected by Chloride, which said Emerson's offer undervalued the company. Shares of Chloride soared early Monday as UK stock traders anticipated a higher offer.
Both Emerson and Chloride are major providers of electrical infrastructure for data centers. On Friday Emerson made an acquisition offer that values Chloride shares at 275 pence, and requested a response by Sunday evening (April 25). In a statement this morning, Chloride confirmed that the two companies discussed a deal with Emerson in 2008 that valued Chloride at 270 pence per share offer, a price that was rejected as too low.
"Since Emerson' s approach in 2008, Chloride has continued to develop the business and its strategy, both organically and through acquisition, and the Board believes the Company has better prospects as result of the steps that it has taken in this regard," Chloride said in a statement. "Accordingly, the Board of Chloride considers that this latest offer proposal from Emerson continues to significantly undervalue the Company and accordingly rejects it."
Emerson (EMR) noted that its offer represented a 34 percent premium to Friday's closing price for Chloride (UK:CHLD). In early trading Monday in London, shares of Chloride (UK:CHLD) soared to 295 pence, well above the Emerson offer.
Emerson said said it believes a combination with Chloride will "create a powerful force in the global UPS." The offer reflects the focus on global reach in the data center equipment business. One of Emerson's historic rivals, APC, was acquired in 2006 by the French conglomerate Schneider.
“Chloride is a good business with a solid management team, said David N. Farr, Chairman, Chief Executive Officer and President of Emerson. "But in a market where scale is becoming increasingly important, we believe that Chloride will be better able to compete long-term with the benefit of the strength and resources of Emerson. As part of Emerson, Chloride will have the support and long-term investment capability necessary to prosper and compete in the global marketplace.”
Emerson saud buying Chloride would solidify its position in Europe and other key geographic markets, transform Chloride from a regional player into a global competitor, and leverage Emerson’s customer relationships to accelerate growth of Chloride’s industrial UPS product offering.
Chloride's sales in fiscal 2009 were £326.7 million. The company employs 2,333 people in 15 countries, of which 374 are located in the UK. Chloride has assembly and test facilities in Italy, France, the USA and India in addition to R&D facilities in India, Germany and Italy and a manufacturing joint venture in China.