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Emerson Really, Really Wants Rockwell Automation

We remain skeptical that Emerson’s shareholders will benefit from a rich offer, and think that much of the value created from a tie-up will accrue to Rockwell’s shareholders.

On Nov. 16,

The strategic rationale is sound, and we believe that industrial automation is an attractive secular growth story. That said, we remain skeptical that Emerson’s shareholders will benefit from a rich offer, and think that much of the value created from a tie-up will accrue to Rockwell’s shareholders. We expect that Rockwell’s board has some serious consideration to do at these levels, given the juicy 30% premium to Rockwell’s undisturbed share price and over 60% premium to our fair value estimate. Rockwell has always valued its independence, and would likely bristle at the proposed “Emerson Rockwell” name. We’re not entirely convinced that granting board representation and the creation of an automation center of excellence in Rockwell’s home town of Milwaukee will assuage Rockwell’s concerns of a culture clash, should the tie-up proceed. However, every company has its price, and Emerson’s latest aggressive offer could be coming close.

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About the Author

Barbara Noverini

Senior Equity Analyst

Barbara Noverini is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers diversified industrials and waste-management providers.

Before joining Morningstar in 2011, Noverini was a research analyst for DeMatteo Monness, a boutique broker/dealer, for five years. From 2001 to 2006, she was a researcher in litigation services for Round Table Group, which is now a part of Thomson Reuters. She began her career as a quality assurance analyst for Hewitt Associates.

Noverini holds a bachelor’s degree in psychology from Northwestern University and a master’s degree in public health informatics from the University of Illinois at Chicago. She also holds the Chartered Financial Analyst® designation.

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