Emerson Bids $1.1 Billion for UPS Maker Chloride

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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.

About the Author

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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5 Comments

  1. Emerson bid was rejected by Chloride. See report from April 26th @ http://www.managingautomation.com/maonline/news/read/Emerson_Bid_for_UPS_Business_Rejected_33402?utm_source=managingautomation&utm_medium=email

  2. shripad b salunkhe

    chloride is best company in ups sector.in india chloride is best settel step by partner of db power.the best wishes to chloride.

  3. Farook Elias

    Chloride is one of the best IF NOT the best manufacturer of industrial type UPS Systems. Emerson is a fat cat that wants to swallow chloride and get the best of it. I cheer the share holders of chloride not to give up such a pioneer company.

  4. SNA Power is a Platinum partner of Emerson TATA Liebert UPS Systems. We deal in all ratings of UPS systems from 1KVA to 4800KVA. We have our offices in New Delhi and Chandigarh and have more than 20 years of experience in the UPS industry. You can visit us at http://snapower.net and drop in your queries. We would be happy to serve you pan India.

  5. And oh BTW.. Chloride (including its Indian subsidiary DB) have been acquired by Emerson.