International. Emerson announced a definitive agreement under which it will sell a majority stake in its Climate Technologies business to private equity funds managed by Blackstone, in a transaction valuing Climate Technologies at $14 billion.
Emerson explained that it will receive pre-tax upfront cash earnings of about $9.5 billion while retaining a non-controlling ownership interest in a new independent joint venture.
Climate Technologies' independent business includes the Copeland compressor business and the full portfolio of products and services across all HVAC and refrigeration end markets, representing approximately $5.0 billion in sales in fiscal 2022.
The transaction marks a significant milestone in Emerson's journey to create a cohesive, higher-value industrial technology portfolio and to become a pure global automation company serving a diversified set of end markets.
As a pure automation company, Emerson will be positioned for further growth, with strong, differentiated capabilities to help customers achieve their sustainability and productivity goals in process, hybrid and discrete industries. Upon completion of the transaction, the company is expected to have significant industry margins, strong free cash flow generation and continue to leverage its management process and operational discipline.
"This announcement is a definite step in the portfolio journey we embarked on when I became CEO in early 2021," said Lal Karsanbhai, president and chief executive officer of Emerson. "Over the past 18 months, the Emerson team has accelerated the transformation of our portfolio, divesting secondary businesses, such as InSinkErator and Therm-O-Disc, while investing in organic growth opportunities and major transactions, such as AspenTech."
"This transaction allows Emerson to partially monetize our Climate Technologies business at an attractive valuation and provides significant upfront cash income to invest in growth, while at the same time allowing Emerson to participate in the upside potential of Climate Technologies by exiting our non-controlling position," Karsanbahai added.
