Emerson Electric, St. Louis, has agreed to sell its commercial and industrial motors unit and its appliance motors and controls businesses to Nidec Corp., Kyoto, Japan, a manufacturer of small motors looking to expand its offerings in larger motor classes and establish a beachhead in the North American market. The operations, management, employees and production facilities will stay in St. Louis on Emerson Electric’s campus.
Combined, Emerson Commercial and Industrial Motors and Emerson Appliance Motors and Controls accounted for more than $800 million in sales in fiscal 2009. Manufacturing facilities and technology centers for both businesses are in the United States, Mexico, China, India and the United Kingdom. The businesses employ about 6,000 people around the world, including 1,700 in the U.S. Terms of the all-cash deal were not disclosed.
Emerson has been evaluating a potential sale of the two business units over the past six months following an offer from an interested potential buyer, said Mark Polzin, an Emerson spokesperson.
“These businesses, while we had them a long time, really no longer had the growth profile that Emerson’s been targeting through the business cycle. We’re looking for faster overall long-term growth,” Polzin said. “As a result of this inquiry and the process that we started, we believed these businesses could perhaps be more successful and a better strategic fit somewhere else. In the end, these two businesses now have more potential for strong growth under a new owner whose focus is being number one in the motor and drive technology business.”
The acquisition gives Nidec a strong new presence in the United States and North America overall for growing its global motor and motor-related business. Nidec had sales in 2009 of over $8 billion, most of it in small and medium-sized OEM motors for IT, consumer electronics, automotive, appliance and industrial applications.
The acquisition of Emerson’s motor and controls (EMC) business is part of a larger merger-and-acquisition strategy Nidec calls “Vision 2015” — a plan to grow the company’s global annual sales to two trillion yen (approximately $23 billion) over the next five years, according to a Nidec release. In January, Nidec acquired Sole Motors, a European manufacturer of motors for home appliances.
“Through the acquisition of EMC, which has a strong presence in the home appliance motor business in North America, we intend to scale up our home appliance motor business with renewed focus on research and development, manufacturing and sales activities,” Nidec’s management said in the release. “We believe that EMC’s large industrial motors, medium-size central air conditioning motors, related motion control technologies and the developing main motors for electric vehicle and hybrid electric vehicle, will not only expand our current product portfolio, but also contribute to further stabilizing volatility in our profitability. We seek to accelerate operational growth by effectively blending Nidec’s industry-leading brushless motor technologies with EMC’s time-proven brand strength and excellent customer base.”
Nidec will operate these businesses from a headquarters building on the Emerson campus that currently is home to the Motor Technology Center. Keeping the businesses intact was an important priority for Emerson in contemplating a sale.
“Emerson was committed in this process to assuring that if the businesses were sold, they would end up in the hands of a strong company that would create a successful environment for its employees and customers,” said Craig Ashmore, Emerson executive vice president, Planning and Development, in a press statement. “While there was considerable interest from many solid companies, Nidec Corp.’s proposal provided overwhelming value for everyone: our customers, employees and shareholders.”
Emerson will continue to operate its hermetic motors business, which serves Emerson Climate Technologies’ Copeland Scroll compressors, and also will continue to operate the large motor business based in Europe (Leroy-Somer) as well as Emerson Air Comfort Products in the United States, which makes the Emerson Ceiling Fan.