by Jared Weiner | 4/21/2023

What Happened?
Emerson (NYSE: EMR) announced last week that it had entered into a definitive agreement to acquire NI (NASDAQ: NATI) for approximately $8.2 billion, reportedly outbidding Fortive and Keysight Technologies, among others. Emerson expects the acqusition to close during the first half of its 2024 fiscal year, which begins in October 2023.

VDC’s View
After nearly a year, Emerson seems to have finally succeeded in what at one point became a hostile takeover bid for the company formerly known as National Instruments. The addition of NI’s industry-leading portfolio of test and measurement solutions should help Emerson accomplish several objectives:

1. Broaden its industry coverage. While Emerson is highly regarded for its expertise and experience in process industries, the company is less engaged with those in discrete and other non-process industrial markets. With NI’s business soon to be under its umbrella, Emerson is set to significantly diversify its industry exposure by serving markets such as aerospace and defense, electronics, and semiconductors, among others.
2. Reach customers earlier. NI’s test and measurement solutions are commonly used by those in the design and validation phase of the product development lifecycle. By adding these types of solutions to its robust portfolio of field instrumentation and industrial automation solutions, Emerson will be able to target customers in an entirely different engineering stage than they typically operate.
3. Accelerate its software strategy. Emerson has been aggressive in its pursuit of software companies in recent years, acquiring Open Systems International in 2020 and then effectively acquiring¹ a 55% stake in AspenTech in 2022. The addition of LabVIEW and the rest of NI’s broad suite of software solutions for data acquistion and control, electronic testing and simulation, and wireless design and testing to its existing software portfolio underscores Emerson’s commitment to scaling its software business.

Looking Ahead
Emerson is reshaping its business to enable dynamic, well-rounded growth. While critics may argue that Emerson’s $60 per share bid is an overpayment compared to its initial offer of $53 per share, the NI brand brings new markets and new customers to an organization that needs to diversify its business to remain successful and keep pace with competitors. Software, in particular, has become critical to the strategies of many of Emerson’s closest competitors, with the likes of Honeywell and Siemens, among others, dedicating significant resources toward building out their industrial software portfolios in pursuit of revenue gains from this incredibly dynamic market. If Emerson is able to effectively integrate NI (and its other new software properties) and develop a cohesive strategy that addresses its customers’ end-to-end engineering requirements, the price paid for NI will be more than worth it.

VDC has covered both Emerson and NI for decades, including within the following recently published reports: The Global Market for Data Acquisition Technologies, The Global Market for Process Level Measurement of Liquids, The Global Market for Process Level Measurement of Solids, and MBSE & Software and System Modeling Tools. Please visit our website or contact us for more details!

¹Officially, Emerson contributed its existing industrial software businesses to AspenTech to create “new AspenTech.” Emerson also contributed $6 billion in cash in exchange for a 55% stake in new AspenTech.