Emerson Slims Down with Spin Off of Network Power Business

Electrical manufacturer Emerson, St. Louis, announced plans to spin off its Network Power business, which concentrates on providing thermal management, A/C and D/C power, transfer switches, services and infrastructure management systems for the data center and telecommunications industries. Network Power will be spun off via a tax-free distribution to shareholders.

The move is part of a plan to streamline Emerson’s portfolio and move it out of a business line that accounted for about $3.8 billion in acquisitions while the company was building it. Emerson said in a release that the move will drive growth and accelerate value creation for shareholders.

Emerson said in a release that it will also explore strategic alternatives for its motors and drives, power generation and remaining storage businesses, and will conduct a complete review and assessment of its corporate services and structure to bring them into alignment with its smaller scale and sharper focus.

The spinoff of Network Power will result in two separate companies with distinct strategies and investment profiles. Emerson will continue to be active in the process, industrial, commercial and residential markets. These actions offer significant opportunities for enhanced growth, profitability, cash flow, and returns to shareholders, the release said.

“We are aligning ourselves with the changing global marketplace and our customers’ evolving needs to drive Emerson and Network Power forward,” said Emerson Chairman and Chief Executive Officer David Farr. “Creating two, independent companies will position both businesses to continue as leaders and to pursue distinct strategies to drive profitable growth. Emerson and Network Power will each have sharper strategic focus, enabling both companies to better allocate resources, incentivize employees and allocate capital to capture the significant long-term opportunities in their respective markets.”

Here's the release: Emerson Announces Strategic Portfolio Repositioning