Emerson To Sell 2 Businesses For $5.2 Billion

Emerson Electric Co. EMR announced two agreements to sell business units to realize a transaction value of $5.2 billion together.

Emerson's one agreement is to divest Network Power to Platinum Equity and a group of co-investors for $4 billion. However, it would retain a subordinated stake in Network Power. The company expects sale of Network Power to close before the current year ends.

The planned divesture marked second sale of business unit to Platinum Equity in the last three years.

The second agreement that Emerson disclosed was its agreement to sell its Leroy-Somer and Control Techniques business units to Nidec Corporation for a value of about $1.2 billion. The company expects this transaction also to close by the end of the current year.

Chairman and CEO, David Farr, commented, "We have achieved a successful result for our shareholders as part of our plan to streamline Emerson to create a more focused company with significant opportunities for growth and profitability in our core served markets."

The company is keen to focus more on its core markets and divesting some units could make them realize their objective. However, the company did not disclose how it is going to use the proceeds. One of the possible means is to reduce debt, which could improve the balance sheet.

The stock is trading above the simple move averages of 50-day and 200-day by 4.96 percent and 12 percent, respectively.