NEW YORK: Diversified U.S. manufacturer Emerson Electric Co is “moving to being more of a buyer” after shedding businesses worth $3.5 billion in recent years and would consider multi-billion dollar acquisitions, the company’s president said on Thursday.
Emerson is still exploring $500 million to $1 billion worth of divestitures to focus the business, but President Edward Monser said in an interview: “We’re moving to the acquisition phase. I think we’ve done the clean-up that we needed to do.”
Earlier on Thursday at the company’s analyst day, Emerson outlined a road map for increasing its annual revenue from about $25 billion to a range of $31 billion to $33 billion in five years. At least $3 billion of that new revenue could come through acquisitions, and Monser said the company could look at deals that are “multi-billion-dollar in size.”
“Our history says smaller has been more successful That doesn’t mean we wouldn’t do a bigger deal,” he said.
Emerson, which makes power, automation and process-related products, had $3.1 billion in cash and equivalents on its balance sheet as of Dec. 31.
Other industrial manufacturers such as United Technologies Corp and Honeywell International Inc have also expressed eagerness to strike deals.
Monser said the acquisition climate is “improving” and noted that “the willingness of people to do deals is better in a weaker economy.”
St. Louis based Emerson projects North America to be the strongest region over the next five to 10 years, and Monser said a deal “that served that market well would be important,” although he added that the company was open to deals elsewhere.
Monser also sees strong prospects for Emerson in Russia, where he says the company’s manufacturing presence gives it an edge.
The company, which takes in about $500 million in sales from Russia, expects a 10 percent increase in sales there this year, primarily from serving oil and gas customers. That compares with Emerson’s projection of as much as an 8 percent drop in industrial production in Russia.
The weaker ruble, sanctions and Russian government guidelines are among the factors encouraging oil and gas customers to buy domestically, Monser said.
Many of Emerson’s multi-national competitors “do not manufacture in Russia and we do,” he said.