Emerson plans to up deal action; Adobe/Omniture deal on track; Varian awaits antitrust OKs

By Cristal Cody

Tupelo, Miss., Oct. 6 - Emerson Electric Co. said Tuesday it will acquire Avocent Corp. for $1.2 billion in cash - and that more deals are ahead.

Emerson's future shopping likely will be limited to much smaller acquisitions than the Avocent takeover, an analyst told Prospect News.

In other situations, Adobe Systems Inc. received early clearance of the federal antitrust waiting period for its $1.8 billion acquisition of Omniture, Inc. The proposal still requires foreign regulatory approvals, but at least one market observer expects the deal to clear all applications.

Also on Tuesday, Varian, Inc. said shareholders approved the takeover of the company by Agilent Technologies, Inc. for $52.00 a share in cash.

Meanwhile, Wall Street turned positive on Tuesday with a push from commodities.

The Dow Jones Industrial Average closed up 131.50 points, or 1.37%, at 9,731.25.

The Standard & Poor's 500 index gained 14.26 points, or 1.37%, to close at 1,054.72. The Nasdaq Composite index rose 35.42 points, or 1.71%, to 2,103.57.

Emerson green lights deals

Emerson said it will buy out Avocent for $25.00 a share, a premium of 22% to the stock's closing price of $20.52 on Monday.

Huntsville, Ala.-based Avocent is a market leader in electronic switches used to remotely control data servers.

St. Louis-based Emerson is a major product technology and engineering services company.

David N. Farr, Emerson's chief executive officer, chairman and president, said on an investors' conference call on Tuesday that the deal offers a "strategic marquee acquisition for us within the network power space. This is taking the game up a big notch."

Emerson said the acquisition of Avocent will increase its ability to deliver total infrastructure management solutions to its data center customers.

The Avocent board of directors unanimously endorsed the offer.

Emerson's takeover of Avocent is expected to require regulatory approvals across the globe, Farr said on the call.

Nearly half of Avocent's 2008 revenues were from outside the United States, according to Emerson.

The transaction is expected to close around Jan. 1 but could settle in December, Farr said on the call.

Eli Lustgarten, an analyst with Longbow Research LLC, told Prospect News on Tuesday that the deal lacks any immediate antitrust issues.

"It's not a huge deal for Emerson," he said. "It's a good strategic move with long-term strategic applications."

Avocent shareholders, though, may not be "totally happy because it dilutes the next year or two, but it's not a real material impact and that makes a difference," Lustgarten said.

Emerson estimates the acquisition will dilute its fiscal-year 2010 earnings per share by 10 cents.

On the conference call, Farr declined to immediately provide specific financial information on the transaction's terms, but he did say Emerson's buying trend is not over.

"We're still on the acquisition hunt," Farr said. "We had a good year in 2008 and 2009. This is not the end of the game for us. I think you're going to see us continue doing acquisitions."

Although Emerson plans to ramp up its deal activity, the transactions are not likely to be on the same scale as the Avocent acquisition, Lustgarten said.

"We're talking much smaller acquisitions," he said.

Avocent shares set a new yearly trading high at $25.13 on Tuesday before the stock closed up $4.34, or 21.15%, at $24.86. Shares have traded as low as $9.89 over the past year.

Emerson's stock added 54 cents, or 1.40%, to close at $39.22.

Adobe waits on Germany

On Tuesday, the Federal Trade Commission said Adobe's acquisition of Omniture received early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Adobe announced in September it will pay $21.50 a share in cash for Orem, Utah-based Omniture, which produces online business analysis platforms.

The deal remains subject to regulatory approval from Germany, according to a schedule 14D-9/A filing Adobe made with the Securities and Exchange Commission on Tuesday.

An Adobe representative declined further comment when contacted Tuesday.

Omniture shares closed Tuesday down 1 cent, or 0.05%, at $21.42 a share.

An analyst told Prospect News on Tuesday that there are "no antitrust issues at all. As you get closer to the deal closing, it'll trade up."

The San Jose, Calif.-based Photoshop maker expects the acquisition of Omniture to close in the fourth quarter.

Adobe shares gained 96 cents, or 2.95%, to end trading at $33.51.

Reviews dictate Varian schedule

Varian said the holders of about 84% of its outstanding shares voted to adopt the merger agreement with Agilent Technologies in a special meeting on Monday.

The $1.5 billion transaction still awaits several regulatory approvals.

On Sept. 14, Varian said it received a request for additional information on the transaction from the U.S. Federal Trade Commission.

In addition to U.S. antitrust approval, the merger requires clearance from regulators in the European Commission and South Korea, according to the companies.

Varian representatives could not be reached for additional comment on Tuesday.

Santa Clara, Calif.-based Agilent produces bio-analytical equipment, while Palo Alto, Calif.-based Varian develops scientific testing instruments.

Varian shares rose 9 cents, or 0.18%, to $51.13.

Agilent shares closed at $27.22, up 40 cents, or 1.49%.

Mentioned in this article:

Adobe Systems Inc. Nasdaq: ADBE

Agilent Technologies, Inc. NYSE: A

Avocent Corp. Nasdaq: AVCT

Emerson Electric Co. NYSE: EMR

Omniture, Inc. Nasdaq: OMTR

Varian, Inc. Nasdaq: VARI

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