Emerson will continue to pursue Chloride takeover

Emerson Electric Co. plans to seek meetings with shareholders of the UKÔÇÖs Chloride Group to press the case for a takeover after Chloride rejected EmersonÔÇÖs recent bid.  London-based Chloride dismissed a $1.12 billion offer from Ferguson, Missouri-based Emerson, saying it was too low. ChlorideÔÇÖs shareholders rejected a $1 billion bid from Emerson back in 2008 for the same reason. EmersonÔÇÖs new bid is only 5p per share higher than its approach two years ago. It is thought that Emerson will now try to persuade Chloride shareholders that a merger would be in their best interests. Meanwhile, ChlorideÔÇÖs shares have soared the most in more than 20 years as investors anticipate a higher offer. Emerson, which had sales of around $20.9 billion in the fiscal year ending September 2009, makes products including InSinkErator garbage disposals and power back-up and cooling systems for data centers and telecommunications networks. The company is seeking to buy Chloride in order to take on rivals Schneider Electric and Cleveland, Ohio-based Eaton Corp. in the market for uninterruptible power supply (UPS) gear, which is used to protect hospitals and airports from power cuts. The UPS market is said to be worth more than $7 billion. Currently, Emerson has around 10 percent of that, and Chloride less. The UK companyÔÇÖs systems in that field currently guard against power cuts on bank trading floors, floodlight failure at sports stadiums and at Heathrow airport's Terminal 5. ChlorideÔÇÖs growth has suffered at the hands of the recession; however the company has indicated that its earnings will rebound this year. Earlier this month it said its order book was 16 percent higher than a year ago, at a record ┬ú160 million ($246 million). In a statement regarding its rejection of EmersonÔÇÖs offer, Chloride said: ÔÇ£The Board confirms that it held discussions in 2008 with Emerson with regard to a 270 pence per share offer and this offer was rejected as it undervalued the Company. ÔÇ£Since Emerson' s approach in 2008, Chloride has continued to develop the business and its strategy, both organically and through acquisition, and the Board believes the Company has better prospects as result of the steps that it has taken in this regard. ÔÇ£Accordingly, the Board of Chloride considers that this latest offer proposal from Emerson continues to significantly undervalue the Company and accordingly rejects it." A Chloride purchase would be the largest of the 23 acquisitions Emerson has announced in the past five years, according to data from Bloomberg. The average size of the 12 deals for which information is available, including the Chloride offer, has been $327.7 million. It is thought that Schneider, based near Paris, and ABB, headquartered in Zurich, are companies that may also take an interest in Chloride. If Emerson did acquire Chloride, it is likely that Chloride would serve as the European network power systems headquarters for Emerson and would bring in more staff to manage the larger operations across Europe.