Emerson Makes Higher Bid for Chloride

The bidding war continues for UK critical power equipment vendor Chloride Power. Emerson Electric appears to have seized the upper hand with a revised bid of 375 pence, valuing the deal at approximately $1.5 billion. That offer tops a bid of $1.3 billion by ABB, which bested a previous $1.1 billion offer by Emerson.

The bidding war appears to provide a spectacular outcome for Chloride shareholders, as the latest Emerson offer represents a 79 percent premium to where shares were trading when Chloride was out in play in April.

Both Emerson and Chloride are major providers of electrical infrastructure for data centers. The two customers discussed a deal in 2008, but were unable to reach an agreement on price. 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.

"The UPS market has become a place where specialist industry knowledge, geographic access and global scale are more important than ever before," Emerson said in its offer. "The geographic reach and offerings of Emerson and Chloride are highly complementary and highlight the strategic importance of the transaction. In addition, the combination with Chloride is expected to deliver significant annual cost savings of at least £33 million through purchasing and manufacturing efficiencies, staff and facility reductions, and the elimination of other business cost structure duplications including overhead reductions."

Emerson says that if its bid is successful, Chloride will serve as Emerson’s new European Network Power Systems headquarters and Chloride will form the basis for Emerson’s European UPS growth strategy. The offer is being made through Rutherfurd Acquisitions Limited, a wholly owned subsidiary of Emerson (EMR).