Solution Providers: Little Change Expected As Emerson Splits, Sells Network Power Business Including Liebert

Emerson Electric Tuesday said it has sold its Emerson Network Power business, which includes the Liebert line of data center power hardware and software, to a private equity company.

Under the terms of the deal, Platinum Equity and a group of co-investors will pay Emerson Electric $4 billion to acquire Emerson Network Power. According to an Emerson Electric Securities and Exchange Commission filing, the deal is expected to close by Dec. 31.

The sale was not unexpected. Emerson Electric said on June 30, 2015, that it planned to spin off its Emerson Network Power business as part of a move to streamline its portfolio while driving growth and creating shareholder value.

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Columbus, Ohio-based Emerson Network Power provides thermal management, AC and DC power hardware and software, transfer switches, services, and information management systems for data center and telecommunications customers, including solutions sold through the channel under the Liebert brand. The business generated about $4.4 billion in revenue in fiscal 2015, Emerson Electric said.

For the most recent fiscal quarter, which ended June 30, Emerson Network Power generated $1.03 billion in revenue, down from the $1.11 billion it generated during the same quarter of last year. Emerson Network Power earnings reached $37 million in the most recent fiscal quarter, down year over year from $101 million.

Scott Barbour, executive vice president of Emerson Electric and business leader for Emerson Network Power, will be in charge of Emerson Network Power after the sale, although the company did not specify his exact title.

Emerson Electric did not reply to a request for more information before this report was published.

Barbour, in a prepared statement, said, "We firmly believe Platinum Equity is an ideal partner as we continue to drive efficiency in our operations and invest to bring innovative products and services to our customers. The work we’ve done at Network Power in recent years ensures we are well prepared for an ownership transition and have the right foundation in place to be successful."

Solution providers working with the Liebert line, which was acquired by Emerson Electric in 1987, told CRN said they expect no impact to their business.

Liebert has always been a solid product line, said Gary Alexander, CEO of Alexander Open Systems, an Overland Park, Kan.-based solution provider and Emerson channel partner.

Alexander told CRN that he has no concerns about the transaction. "Obviously, if somebody is willing to spend that amount to acquire Emerson, they must be dedicated to building the business," he said.

Jack Vonich, vice president of sales and strategic partnerships at Instor Solutions, a Fremont, Calif.-based solution provider and Diamond-level Liebert channel partner, told CRN via email that he also does not expect a lot of impact from the deal.

"It will be interesting to see if they continue to invest in the development of their products at the rate they have been. From the last partner meeting in Columbus, [Ohio], it seemed they don’t plan to change much in the way they are going to do business with their spin-off. We hope that breaking away from the larger Emerson umbrella will allow them to do new things," Vonich wrote.