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ACQUISITIONS AND DIVESTITURES | 12 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
ACQUISITIONS AND DIVESTITURES | ACQUISITIONS AND DIVESTITURES National Instruments On October 11, 2023, the Company completed the acquisition of National Instruments Corporation (“NI”). 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 approximately $1.7 billion and pretax earnings of approximately $170 for the 12 months ended September 30, 2023. NI is now referred to as Test & Measurement and reported as a new segment in the Software and Control business group, see Note 20. The following table summarizes the components of the purchase consideration reflected in the acquisition accounting for NI.
Cash paid to acquire remaining NI shares not already owned by Emerson |  | $ | 7,833 |
Payoff of NI debt at closing |  | 634 |
Total consideration paid in cash at closing |  | 8,467 |
Fair value of NI shares already owned by Emerson prior to acquisition |  | 137 |
Value of stock-based compensation awards attributable to pre-combination service |  | 49 |
Total purchase consideration |  | $ | 8,653 |
The total purchase consideration for NI was allocated to assets and liabilities as follows.
Cash and equivalents |  | $ | 135 |
Receivables |  | 309 |
Inventory |  | 490 |
Other current assets |  | 140 |
Property, plant and equipment |  | 328 |
Goodwill ($121 expected to be tax-deductible) |  | 3,442 |
Other intangible assets |  | 5,275 |
Other assets |  | 105 |
Total assets |  | 10,224 |
Accounts payable |  | 52 |
Accrued expenses |  | 315 |
Deferred taxes and other liabilities |  | 1,204 |
Total purchase consideration |  | $ | 8,653 |
The estimated intangible assets attributable to the transaction are comprised of the following (in millions):
|  | Amount |  | Estimated Weighted Average Life (Years)
Developed technology |  | $ | 1,570 |  |  | 9
Customer relationships |  | 3,360 |  |  | 15
Trade names |  | 210 |  |  | 9
Backlog |  | 135 |  |  | 1
Total |  | $ | 5,275 |  |  |
Results of operations for the year ended September 30, 2024 attributable to the NI acquisition include sales of $1,464 and a net loss of $537. The net loss included the impact of inventory step-up amortization, intangibles amortization, retention bonuses, stock compensation expense and restructuring. Pro Forma Financial Information The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of NI occurred on October 1, 2022. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time ($ in millions, except per share amounts).
|  | 2023 |  |  | 2024 |  |  |  |
Net Sales |  | 16,858 |  |  | 17,511 |  |  |  |
Net earnings from continuing operations common stockholders |  | 1,508 |  |  | 1,982 |  |  |  |
Diluted earnings per share from continuing operations |  | 2.61 |  |  | 3.45 |  |  |  |
Pro forma Net sales for the year ended September 30, 2023 include $1,693 attributable to NI. The pro forma results for the year ended September 30, 2023 include transaction costs of $198 which were assumed to be incurred in the first quarter of fiscal 2023. These transaction costs include $88 incurred by NI prior to the completion of the transaction and $110 incurred by Emerson in periods subsequent to the first quarter of fiscal 2023. The pro forma results for the year ended September 30, 2023 also include $424 of ongoing intangibles amortization, backlog amortization of $136, inventory step-up amortization of $213, and retention bonuses of $55, and exclude the mark-to-market gain of $56 recognized on the equity investment in National Instruments Corporation (see Note 6). 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 (defined as "AspenTech" herein). Upon closing of the transaction, Emerson beneficially 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 the Emerson Industrial Software Business continues at its 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 Useful 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 2023 attributable to the Heritage AspenTech acquisition include sales of $752 compared to $356 for 2022, while the impact to GAAP net earnings was not material in both years. Pro Forma Financial Information The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of Heritage AspenTech occurred on Oct ober 1, 2020. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time ($ in millions, except per share amounts).
| 2022 |
Net Sales | $ | 14,218 |
Net earnings from continuing operations common stockholders | $ | 1,916 |
Diluted earnings per share from continuing operations | $ | 3.21 |
The pro forma results for 2022 exclude $91 of transaction costs which were included in the Company's reported results for 2022, but were assumed to be incurred in the first quarter of 2021. The pro forma results for 2022 include additional interest expense of $56 related to the issuance of $3.0 billion of term debt and increased commercial paper borrowings to fund the acquisition, which assumes such borrowings were outstanding for the entire year. Other Transactions In 2024, the Company divested two small businesses, both in the Final Control segment, and recognized a pretax loss of $48 in total ($50 after-tax, $0.09 per share). In 2023, the Company acquired two businesses, Flexim, which is reported in the Measurement & Analytical segment, and Afag, which is reported in the Discrete Automation segment, for $715, net of cash acquired. The Company recognized goodwill of $424 (none of which is expected to be tax deductible) and other identifiable intangible assets of $323, primarily customer relationships and intellectual property with a weighted-average useful life of approximately 9 years. 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). On August 1, 2023, AspenTech announced the termination of the agreement to purchase Micromine. AspenTech, along with the sellers of Micromine, had been waiting to secure a final Russian regulatory approval as a condition to the closing of the transaction. As this process continued, the timing and requirements necessary to get this approval became increasingly unclear. This lack of clarity on the potential for, and timing of, a successful review led AspenTech and the sellers of Micromine to this mutual course of action. AspenTech did not pay any termination fee as part of this arrangement. On March 31, 2023, Emerson completed the divestiture of Metran, its Russia-based manufacturing subsidiary. In 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. The Company had previously announced its intention to exit business operations in 2022 and recognized a pretax loss of $181 ($190 after-tax, in total $0.32 per share). This charge included a loss of $36 in operations and $145 reported in Other deductions ($10 of which is reported in restructuring costs) and was primarily non-cash. Emerson's historical net sales in Russia represented approximately 2.0 percent of consolidated annual sales. In 2022, the Company acquired three other businesses, two in the Control Systems & Software segment and one in the AspenTech segment, for $130, net of cash acquired. The three businesses had combined annual sales of approximately $40. In the first quarter of 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 of 2022, $358 after-tax, $0.60 per share) and received the remaining $15 related to the pretax gain in the first quarter of 2023. In 2023, the Company received additional distributions totaling $161 ($122 after-tax, $0.21 per share) and in 2024, received its final distribution of $79 ($60 after-tax, $0.10 per share).

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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 -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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