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Emerson and Artesyn Technologies announced their acquisition agreement on February 2, 2006, offering $11 in cash for each Artesyn share—about $500 million net of acquired cash. The merger agreement itself was dated February 1, 2006.
What Emerson agreed to pay
The announced offer was $11 per Artesyn share in cash. Emerson and Artesyn described the transaction’s value as approximately $500 million net of acquired cash; that aggregate figure is not the per-share price. The terms and announcement are set out in the joint announcement filed with the SEC and Artesyn’s Form 8-K.
The merger agreement also specified cash treatment for certain other securities. Holders of outstanding options were to receive cash based on the amount, if any, by which $11 exceeded the applicable exercise price, multiplied by the shares underlying the options. Convertible-note holders were to receive $11 for each share into which their notes otherwise would have converted. These provisions describe the agreement’s treatment of those securities, not additional per-share consideration for Artesyn common stock.
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How the merger was structured
Emerson’s wholly owned Atlanta Acquisition Sub was to merge into Artesyn. Artesyn would remain as the surviving company and become a wholly owned Emerson subsidiary. The Form 8-K describes the legal structure and conditions in the merger agreement summary.
Completion was conditional, rather than automatic upon the announcement. The stated conditions included Artesyn stockholder approval, applicable antitrust waiting-period expiry or termination, and customary legal and contractual conditions. Those included the accuracy of representations and warranties, performance of obligations, and the absence of a material adverse effect. The agreement also included termination-fee provisions, including a $15 million fee in specified circumstances; that was not an additional payment to shareholders under the offer.
Why Emerson said it wanted Artesyn
The companies presented the deal as a way to add Artesyn’s embedded power-conversion technologies to Emerson Network Power’s portfolio. The target customers were in enterprise computing, data and telecommunications. In their February 2 announcement, they said: “The agreement brings additional embedded power conversion technologies to Emerson Network Power’s existing portfolio of solutions for customers in the enterprise computing, data, and telecommunications industries.” This was the companies’ stated strategic rationale, not evidence by itself that the anticipated benefits were achieved.
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What happened after the 2006 announcement
Emerson later reported selling a 51% controlling interest in Artesyn on November 22, 2013. Its FY2014 Form 10-K recorded proceeds of $264 million, net of working-capital adjustments, and valued its retained interest at approximately $60 million. These figures describe the later divestiture, not the 2006 acquisition price. See Emerson’s FY2014 Form 10-K.
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