Emerson Electric will sell a majority stake in its climate technologies unit to Blackstone in a deal that values it at $14 billion.
The latest deal is part of Emerson Electric’s aim to strengthen focus on the booming automation market. Emerson earlier sold its unit that makes waste disposal equipment and hot water dispensers to Whirlpool and merged its software units with smaller rival Aspen Technology.
Emerson will receive an upfront payment of about $9.5 billion. Emerson will use the proceedings from the deal to acquire companies, especially in the automation segment. The deal is expected to close in the first half of 2023.
Emerson is also accelerating its software strategy to capture the increasing shift among businesses to automate their operations as they struggle with a shortage of factory workers.
Emerson, which will retain about 45 percent stake in the climate tech unit, said Blackstone and co-investors Abu Dhabi Investment Authority and GIC, would contribute $4.4 billion in equity toward the deal, which would be supplemented by $5.5 billion of debt financing.
The Climate Technologies business, which will be structured as a joint venture, generated net sales of $5 billion in fiscal 2022. The unit includes its Copeland compressor business and products and services across residential and commercial heating and cooling.
“The business is poised for accelerated growth as it leads the way in helping consumers and businesses shift to more energy-efficient heating and cooling products as part of their carbon reduction efforts,” global head of Blackstone Private Equity Joe Baratta said.