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Acquisitions and Divestitures | 6 Months Ended
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Mar. 31, 2023
Business Combinations [Abstract] |
Acquisitions and Divestitures | ACQUISITIONS AND DIVESTITURES Aspen Technology On May 16, 2022, the Company completed the transactions contemplated by its definitive agreement with Aspen Technology, Inc. ("Heritage AspenTech") to contribute two of Emerson's stand-alone industrial software businesses, Open Systems International, Inc. and the Geological Simulation Software business (collectively, the “Emerson Industrial Software Business”), along with approximately $6.0 billion in cash to Heritage AspenTech stockholders, to create "New AspenTech", a diversified, high-performance industrial software leader with greater scale, capabilities and technologies (hereinafter referred to as "AspenTech"). Upon closing of the transaction, Emerson owned 55 percent of the outstanding shares of AspenTech common stock (on a fully diluted basis) and former Heritage AspenTech stockholders owned the remaining outstanding shares of AspenTech common stock. AspenTech and its subsidiaries now operate under Heritage AspenTech’s previous name “Aspen Technology, Inc.” and AspenTech common stock is traded on NASDAQ under AspenTech’s previous stock ticker symbol “AZPN.” The business combination has been accounted for using the acquisition method of accounting with Emerson considered the accounting acquirer of Heritage AspenTech. The net assets of Heritage AspenTech were recorded at their estimated fair value and for the Emerson Industrial Software Business continue at their historical basis. The Company recorded a noncontrolling interest of $5.9 billion for the 45 percent ownership interest of former Heritage AspenTech stockholders in AspenTech. The noncontrolling interest associated with the Heritage AspenTech acquired net assets was recorded at fair value determined using the closing market price per share of Heritage AspenTech as of May 16, 2022, while the portion attributable to the Emerson Industrial Software business was recorded at its historical carrying amount. The impact of recognizing the noncontrolling interest in the Emerson Industrial Software Business resulted in a decrease to additional paid-in-capital of $550. The following table summarizes the components of the purchase consideration reflected in the acquisition accounting using Heritage AspenTech's shares outstanding and closing market price per share as of May 16, 2022 (in millions except share and per share data):
Heritage AspenTech shares outstanding |  | 66,662,482 |
Heritage AspenTech share price |  | $ | 166.30 |
Purchase price |  | $ | 11,086 |
Value of stock-based compensation awards attributable to pre-combination service |  | 102 |
Total purchase consideration |  | $ | 11,188 |
The total purchase consideration for Heritage AspenTech was allocated to assets and liabilities as follows.
Cash and equivalents |  | $ | 274 |
Receivables |  | 43 |
Other current assets |  | 280 |
Property, plant equipment |  | 4 |
Goodwill ($34 expected to be tax-deductible) |  | 7,225 |
Other intangible assets |  | 4,390 |
Other assets |  | 513 |
Total assets |  | 12,729 |
Short-term borrowings |  | 27 |
Accounts payable |  | 8 |
Accrued expenses |  | 115 |
Long-term debt |  | 255 |
Deferred taxes and other liabilities |  | 1,136 |
Total purchase consideration |  | $ | 11,188 |
Emerson's cash contribution of approximately $6.0 billion was paid out at approximately $87.69 per share (on a fully diluted basis) to holders of issued and outstanding shares of Heritage AspenTech common stock as of the closing of the transactions, with $168 of cash remaining on AspenTech's balance sheet as of the closing which is not included in the allocation of purchase consideration above. The estimated intangible assets attributable to the transaction are comprised of the following (in millions):
|  | Amount |  | Estimated Weighted Average Life (Years)
Developed technology |  | $ | 1,350 |  |  | 10
Customer relationships |  | 2,300 |  |  | 15
Trade names |  | 430 |  |  | Indefinite-lived
Backlog |  | 310 |  |  | 3
Total |  | $ | 4,390 |  |  |
Results of operations for the three and six months ended March 31, 2023 attributable to the Heritage AspenTech acquisition include sales of $151 and $319, respectively, while the impact to GAAP net earnings was not material. Pro Forma Financial Information The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of Heritage AspenTech occurred on Oct ober 1, 2020. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time ($ in millions, except per share amounts).
| Three Months Ended March 31, |  | Six Months Ended March 31,
|  | 2022 |  |  |  |  |  |  | 2022 |  |
Net Sales |  | $ | 3,478 |  |  |  |  |  |  | $ | 6,806 |  |
Net earnings from continuing operations common stockholders |  | $ | 423 |  |  |  |  |  |  | $ | 1,158 |  |
Diluted earnings per share from continuing operations |  | $ | 0.71 |  |  |  |  |  |  | $ | 1.94 |  |
The pro forma results for the six months ended March 31, 2022 include $44 of transaction costs which were assumed to be incurred in the first fiscal quarter of 2021. Of these transaction costs, $7 and $30 were included in the Company's reported results for the three and six months ended March 31, 2022, respectively, but have been excluded from the fiscal 2022 pro forma results above. In addition, Heritage AspenTech incurred $68 of transaction costs prior to the completion of the acquisition that were not included in Emerson's reported results. The pro forma results for the three and six months ended March 31, 2022 include estimated interest exp ense of $19 and $56, respectively, related to the issuance of $3 billion of term debt and increased commercial paper borrowings to fund the acquisition. Other Transactions On April 12, 2023, Emerson announced an agreement to acquire National Instruments Corporation ("NI") for $60 per share in cash at an equity value of $8.2 billion. The effective price per share is $59.61 considering shares previously acquired by Emerson, see Note 11. NI, which provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost, had revenues of $1.66 billion in 2022. The transaction is expected to close in the first half of Emerson’s fiscal 2024, subject to the completion of customary closing conditions, including regulatory approvals and approval by NI shareholders. On July 27, 2022, AspenTech entered into an agreement to acquire Micromine, a global leader in design and operational solutions for the mining industry, for AU$900 (approximately $623 USD based on exchange rates when the transaction was announced). The closing of the acquisition is subject to regulatory approval. On March 31, 2023, Emerson completed the divestiture of Metran, its Russia-based manufacturing subsidiary. In the first quarter of fiscal 2023, the Company recognized a pretax loss of $47 in Other deductions ($47 after-tax, in total $0.08 per share) related to its exit of business operations in Russia. In the first quarter of fiscal 2022, the Company received a distribution of $438 related to its subordinated interest in Vertiv (in total, a pretax gain of $453 was recognized in the first quarter, $358 after-tax, $0.60 per share). Based on the terms of the agreement and the current calculation, the Company could receive additional distributions of approximately $75 which are expected to be received over the next two-to-three years. However, the distributions are contingent on the timing and price at which Vertiv shares are sold by the equity holders and therefore, there can be no assurance as to the amount or timing of the remaining distributions to the Company.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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