Nidec Agrees to Pay $1.2 Billion for Emerson Drives, Powerby and
Deal follows 2010 purchase of Emerson’s motors, control ops
Buyer to pay cash, expects to close deal in third quarter
Nidec Corp. agreed to pay $1.2 billion for the motors, drives and electric power generation business of Emerson Electric Co., adding customers in Europe and North America. The purchase is the Japan-based precision motor-maker’s largest.
The all-cash deal includes France-based Leroy Somer Holding and businesses based in the U.K., U.S., China and India, Nidec said Tuesday in a statement. Nidec purchased other divisions of St. Louis-based Emerson in 2010.
Nidec, led by 71 year-old billionaire Chairman Shigenobu Nagamori, has announced deals worth about $2.9 billion since 2000 to add more than 40 companies and form the world’s biggest maker of precision motors for hard-disk drives. Bringing on the Emerson businesses will help Nidec reach its mid-term target of 2 trillion yen ($20 billion) in sales, compared with the 1.178 trillion yen it booked for the year ended March, the Kyoto, Japan-based company said in the statement.
“This fits in with his diversification plans,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, referring to Nagamori. “He thinks electric motors have a great future and are going to be used for more and more things. It’s going to be a growth business.”
Nidec’s two biggest customers are Seagate Technology Plc and Western Digital Corp., which make hard drives used in personal computers and other devices, according to data compiled by Bloomberg. That has prompted the company to look to broaden its product range as growth shifts away from disc drives to solid-state storage modules for top-selling computer tablets and smartphones.
Nagamori last year said he could envision buying a company with sales of as much as 1 trillion yen to help raise Nidec’s revenue to 10 trillion yen. The Emerson deal announced Tuesday is more than triple the size of its next-largest, the $337 million acquisition of pump-maker Geraete- und Pumpenbau GmbH Dr Eugen Schmidt completed last year.
Nidec’s 2010 acquisition included Emerson’s commercial and industrial motors as well as its appliance motors and controls, while excluding Leroy-Somer, the large motor business based in Europe.
Emerson Chief Executive Officer David Farr in June 2015 announced plans to spin off the company’s network power division and explore options for other operations, including motors and drives, to focus on more profitable units.