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Founded in the late 1800s, Emerson Electric (NYSE: EMR) is now an industrial giant. The company has a variety of units that deal with things like network power, industrial management, appliances and tools, and climate technologies. Last year, revenues hit $24.8 billion, with net income of $2.4 billion.
To bolster its position, Emerson is targeting acquisitions, which look especially attractive at current valuations. And, the latest deal came today: the $1.2 billion purchase of Avocent (NASDAQ: AVCT).
Emerson will tuck-in this company within the network power business, which will increase revenues to about $2.6 billion. Essentially, Avocent sells sophisticated technologies that help increase the energy efficiency of data centers for customers like Yahoo! (NASDAQ: YHOO). It's a complicated problem, but there can be huge savings. And, in the long-term, these types of solutions will become increasingly critical.
At the same time, Avocent has a strong footprint in global markets. This is important as companies greatly expand their information technology infrastructures across different geographies.
In fact, Wall Street likes the deal. In Tuesday morning trading, the shares of Emerson were up 3.59% to $40.07.
Tom Taulli is the author of various books, including The IPO Primer and The Complete M&A Handbook
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