Blackstone to acquire majority stake in Emerson Climate Technologies

Emerson has agreed to sell a 55% stake in its Climate Technologies business to alternative asset manager Blackstone to form a higher value, cohesive industrial technology portfolio, and to develop a pure-play automation company.

In a deal valuing Climate Technologies at $14 billion, Emerson will get upfront, pre-tax cash proceeds of around $9.5 billion as well as a note of $2.25 billion.

Emerson will invest the proceeds from the deal in strategic merger and acquisitions (M&A) to expand its automation portfolio in four targeted adjacent markets.

The standalone Climate Technologies business with around $5 billion of fiscal 2022 sales consists of Copeland compressor business and products and services across all heating, ventilation, and air conditioning (HVAC) and refrigeration end-markets.

Lal Karsanbhai — Emerson President and CEO said: “This transaction enables Emerson to partially monetize our Climate Technologies business at an attractive valuation and provides significant upfront cash proceeds to invest in growth, while at the same time enabling Emerson to participate in Climate Technologies’ upside potential upon exit of our non-controlling position.”

Emerson will, however, retain a 45% stake in a new independent joint venture Climate Technologies.

Joe Baratta — Blackstone Private Equity Global Head said: “Copeland is the market leader in supplying critical components for residential, commercial and refrigeration climate control systems.

“The business is poised for accelerated growth as it leads the way in helping consumers and businesses shift to more energy-efficient heating and cooling products as part of their carbon reduction efforts.”

As part of the transaction, Emerson will sell its campus in St. Louis, Missouri to the Climate Technologies joint venture.

Expected to be wrapped up in H1 2023, the transaction is subject to the receipt of regulatory approvals and customary closing conditions.