Proposal Represents Immediate, Compelling Cash
Premium of 32% Over NI's Closing Share Price on January 12, 2023
Offers Deal Certainty for NI Shareholders – No
Financing Contingency, No Anticipated Regulatory Concerns
Public Proposal Follows Numerous Attempts to
Engage with NI in Private over Last Eight Months, Leading Up to
NI's Public Announcement of Strategic Review
NI's Test and Measurement Technology Fully
Aligned with Emerson's Strategy to Develop a Cohesive, Higher
Growth and Higher Margin Portfolio and Advance Global Automation
Focus
Emerson to Host Conference Call to Discuss
Proposal Today at 8:30 a.m. Eastern
Time
ST.
LOUIS, Jan. 17, 2023 /PRNewswire/ -- Emerson
(NYSE: EMR) today announced that it submitted a proposal to the
Board of Directors of National Instruments ("NI") (NASDAQ: NATI) to
acquire NI for $53 per share in cash
at an implied enterprise value of $7.6
billion.
The proposal, which is not subject to any financing conditions,
was submitted to NI on November 3,
2022, and represents an improvement over an initial
$48 per share proposal submitted on
May 25, 2022. Emerson has made
numerous attempts to engage constructively with NI in private since
May 16, 2022, as outlined in the
correspondence below. Full details, including Emerson's previous
correspondence with NI, are available at
www.MaximizingValueAtNI.com.
The proposal represents:
- Immediate and certain cash value for all NI shareholders;
- A 32% premium to NI's closing share price as of January 12, 2023, the day prior to NI's public
announcement of a strategic review on January 13, 2023;
- A 45% premium to NI's closing share price as of November 3, 2022, the day Emerson submitted its
latest proposal to acquire NI;
- A 38% premium to the volume weighted average price for the last
30 trading days ending January 12,
2023; and
- A 23% premium to NI's 52-week high intra-day share price of
$43.12, as of January 12, 2023.
"Although Emerson would have preferred to reach an agreement
privately, given NI's announcement that it is undertaking a
strategic review, and after refusing to work with us toward a
premium cash transaction over the past eight months, we are making
our interest public for the benefit of all NI shareholders," said
Lal Karsanbhai, President and Chief Executive Officer of Emerson.
"Acquiring NI is another step forward in Emerson's journey to
develop a cohesive, higher growth and higher margin portfolio and
build on its global automation focus. As Emerson outlined at our
recent Investor Conference, we are transforming our portfolio
toward higher-growth automation markets aligned with secular macro
trends, which will deliver significant growth and profitability for
years to come."
Mr. Karsanbhai continued, "We have long admired NI and believe
that combining its best-in-class electronic test and measurement
product and software offerings with Emerson's industry-leading
automation technology and software would enhance our ability to
bring comprehensive solutions to a diverse set of end markets,
accelerating growth and positioning Emerson to create significant
shareholder value. We stand ready to work immediately with NI's
Board and management team to reach an agreement that would provide
a compelling premium and certain cash value today for all NI
shareholders."
Combination Would Advance Emerson's Global Automation
Focus
The proposed transaction continues Emerson's transformation into
a global automation company. Benefits of the transaction
include:
- Aligned with Emerson's Portfolio Transformation Into a
Cohesive, Higher Growth, and More Profitable
Company: Emerson is actively transforming its portfolio to
create a higher value, cohesive industrial technology portfolio
serving a diversified set of end markets. With NI, Emerson would
gain a strong, complementary portfolio of differentiated electronic
test and measurement offerings, and a technology stack of
industry-leading intelligent devices, controls and software that
complements Emerson's technology stack in its core automation
markets. As outlined at Emerson's November
29, 2022 Investor Conference, test and measurement is one of
Emerson's four priority segments.
- Further Diversification of End Markets: With favorable
long-term trends and an estimated priority target TAM of
$35 billion, test and measurement is
a fast-growing and complementary adjacency to Emerson's portfolio.
This acquisition would enable Emerson to further expand and
diversify its customer base within highly attractive end markets
with strong secular trends including semiconductor, automotive and
electric vehicles, and aerospace and defense.
- Significant Financial Benefits: The transaction is
expected to be accretive to Emerson's adjusted EPS in the first
year, meets Emerson's communicated returns threshold and will
improve Emerson's overall growth. NI has an attractive financial
profile, with approximately 70% gross margins. NI's business has
strong positions in attractive and growing markets, creating
sustainable top line growth potential. Emerson sees significant
potential for profit and cash flow improvement across the NI
business by applying proven operational excellence and productivity
levers through Emerson's Management System.
- Emerson's Strong Commitment to the Transaction: Emerson
believes its premium proposal will bring clear and realizable value
to NI shareholders, who have faced years of share price
underperformance across nearly any period. Underscoring its
commitment to consummating a transaction, Emerson has purchased 2.3
million shares of NI stock and has received approval under
HSR1 to increase its stake. Emerson believes that there
is a path to a friendly transaction and urges NI shareholders to
make their views known to NI's management and Board. Furthermore,
Emerson is prepared to nominate directors for election to NI's
Board.
Emerson's Public Proposal Follows Eight Months of Delay and
Lack of Engagement
Emerson's first outreach to NI regarding a potential all-cash
acquisition was on May 16, 2022, and
Emerson's initial $48 per share
proposal was formalized in a letter on May
25, 2022. For eight months, NI delayed and refused to engage
meaningfully with Emerson, as outlined in the correspondence below.
In addition, after receiving the initial May
25, 2022 proposal from Emerson, NI not only refused to
engage with Emerson – it repurchased more than 2 million shares at
an average weighted price of $40.25,
the largest quarterly repurchase in its history on a dollar basis,
depriving its shareholders of the opportunity to realize immediate
cash value through the transaction price, which is significantly
above the repurchase price.
In a November 3, 2022 letter,
Emerson outlined the terms of an improved all-cash proposal of
$53 per share and highlighted its
numerous attempts to engage with NI to that date. On November 15, 2022, NI responded to Emerson,
indicating that it had created a working group of its Board to
examine Emerson's proposal in greater detail, as well as evaluate
options with the assistance of advisors.
In the more than two months since, NI continued to resist
engaging meaningfully with Emerson to work toward an agreement.
Eight months after Emerson's approach, NI agreed to a January 4, 2023 meeting with representatives from
Emerson, which was followed by one additional conference call.
During these discussions, NI shared very limited, high-level
information about its business and continued to demonstrate its
unwillingness to provide more detailed information, including
refusing to respond to key diligence questions provided ahead of
the meeting. NI then informed Emerson that this would be the extent
of its engagement. In a letter dated January
11, 2023, Emerson reiterated its $53 per share proposal to acquire NI.
NI Shareholders: Stop Your Board's Delay Tactics
Emerson is disappointed that NI chose to announce a strategic
review and put in place a poison pill on January 13, 2023, rather than engaging privately
and constructively. NI did not respond to Emerson's latest letter
sent on January 11 before its public
announcement.
NI's strategic review announcement comes more than two months
after the NI Board purportedly formed a working group to evaluate
options with its advisors – with no results.
NI shareholders should understand that for eight months they
have been deprived of the opportunity to realize certain cash
value at a significant premium. Emerson urges NI shareholders
to engage with their Board to ensure this public
strategic review process is not merely another delay tactic.
Emerson has organized the resources to work expeditiously toward
a transaction with NI, has shared a merger agreement with NI, and
is prepared to transact promptly. Emerson has performed due
diligence with publicly available information and would have only
limited and specific confirmatory due diligence requirements.
Additionally, Emerson does not anticipate any significant
regulatory risks or delays given the complementary nature of the
two businesses. Finally, the Emerson proposal is not subject to any
financing conditions.
Emerson feels compelled to disclose the contents of all its
correspondence with NI, beginning in May
2022, to make public its consistent and sustained track
record of attempted engagement with NI, without any meaningful or
constructive response. This correspondence is below and is also
available at www.MaximizingValueAtNI.com.
Investor Conference Call and Presentation
Today, beginning at 7:30 a.m. Central
Time / 8:30 a.m. Eastern Time,
Emerson management will discuss the proposal during an investor
conference call. Participants can access a live webcast available
at www.Emerson.com/en-us/investors at the time of the call. A
replay of the call will be available for 90 days on the company
website and at www.MaximizingValueAtNI.com. Conference call slides
will be posted in advance of the call on the company website and at
www.MaximizingValueAtNI.com.
Advisors
Goldman Sachs & Co. LLC and Centerview Partners LLC are
serving as financial advisors to Emerson
and Davis Polk & Wardwell LLP and Sidley Austin LLP are
serving as legal advisors.
Emerson's Correspondence with NI
May 25, 2022 – Emerson's First
Offer Letter to NI
Eric
Starkloff
President and Chief Executive Officer
National Instruments Corporation
11500 N Mopac Expwy
Austin, TX 78759-3504
Dear Eric:
Further to my recent discussions with you, I am
excited to present you with this proposal (the "Proposal") for the
acquisition of all outstanding shares of National Instruments
Corporation ("NI") by Emerson Electric Co. ("Emerson").
We are very excited about the combination of our
two firms and the potential we can achieve together. Emerson has
long admired NI as a technology leader in the electronic test and
measurement industry, a complementary adjacency to our Automation
Solutions business with a similar technology stack of intelligent
devices, controls, and software. We have been particularly
impressed with NI's portfolio including modular intelligent devices
and the LabVIEW suite of offerings, as well as NI's industry
stewardship over many decades in this space. Combining NI with
Emerson would lead to significant opportunities for both of our
teams and further develop our position as a premier global
automation company.
In addition to the immediate value created for
your shareholders as outlined in the Proposal, Emerson has
demonstrated long term stewardship and investment in acquired
businesses over many decades. Our industry leading Automation
Solutions platform was built through a combination of sustained
organic investments as well as strategic acquisitions of highly
innovative businesses including Rosemount, Micro Motion, Fisher,
and most recently our acquisition of majority control in AspenTech.
All of these businesses have thrived under Emerson ownership and
are leaders in their respective markets. With the potential
acquisition of NI, we are looking to continue our long history of
stewardship and commitment to growth, development, and engineering
leadership.
With that backdrop, I am pleased to present you
and your Board with this Proposal:
Valuation
Emerson proposes to purchase 100% of the
outstanding common stock of NI for $48 in cash per common share, which implies an
equity value of $6.49 billion and an
enterprise value of $6.67 billion. We
believe our Proposal provides significant value to your
shareholders:
-
-
- A 39% premium to NI's closing share price as of May 24, 2022;
- A 36% premium to the volume weighted average price for the last
30 trading days ending May 24,
2022;
- A 4% premium to the 52 week high trading price as of
May 24, 2022
Financing
Our Proposal is not subject to any financing
condition and would be financed from cash on hand, committed lines
of credit and/or other available sources of financing.
Regulatory
While applicable regulatory approvals will be
required, we do not expect there to be substantive impediments to
closing. We note the complementary nature of our respective
businesses.
Due Diligence
This Proposal is based on publicly available
information under the assumption that it presents fairly and
completely NI and its businesses and its outstanding debt and share
count. It is subject to the completion of customary and
confirmatory due diligence (e.g., tax, environmental, legal, etc.).
We are prepared to move quickly to complete such due diligence when
appropriate.
Timing
Emerson is prepared to proceed immediately to
work with NI and its advisors to complete due diligence and to
negotiate a mutually agreeable merger agreement (the "Definitive
Agreement") in parallel. It is our expectation that the signing of
the Definitive Agreement and announcement can be achieved in 4-6
weeks.
We have no current plan to disclose this letter
and assume that you do not intend to either. Our strong preference
is to work constructively and expeditiously with you and your board
to announce a Definitive Agreement.
Board Review
This Proposal has been reviewed with Emerson's
board of directors who support the proposed transaction. The final
approval of Emerson's board of directors would be required prior to
entering into the Definitive Agreement.
Other
The Definitive Agreement would be negotiated and
executed by Emerson and NI and closing would be conditioned upon
required NI shareholder approval, required regulatory approvals and
other customary conditions. Emerson shareholder approval will not
be required.
To reiterate, our Proposal – all cash
consideration with no financing contingency and no substantive
regulatory impediments – provides both significant value and
certainty to NI's shareholders. We are prepared to move very
quickly to complete our due diligence and sign definitive
agreements.
We are highly enthusiastic about the prospects
of what we can achieve together. On behalf of Emerson, I thank you
again for the dialogue thus far and for your consideration of this
Proposal. We look forward to hearing from you.
Sincerely,
Lal Karsanbhai
President and Chief Executive Officer
June 16, 2022 – NI's Response
to May 25 Letter
Lal Karsanbhai
President and Chief Executive Officer
Emerson Electric Co.
8000 West Florissant Avenue
PO Box 4100
St. Louis, MO 63136-8506
Dear Lal:
The Board of Directors (the "Board") of National
Instruments Corporation ("NI") has carefully reviewed your letter
dated May 25, 2022, with the
assistance of our financial and legal advisors.
The Board has unanimously determined that your
letter does not provide a basis for further discussions.
NI's Board and management team will remain
focused, without distraction, on executing our strategies that are
producing a significant and steady increase in bookings and
revenue, strengthened operational performance, and advances in
technology.
Sincerely,
/s/
Eric
Starkloff
President and Chief Executive Officer
/s/
Michael E.
McGrath
Chairman of the Board
June 22, 2022 – Emerson's
Second Offer Letter to NI
Eric
Starkloff
President and Chief Executive Officer
Michael E.
McGrath
Chairman of the Board
National Instruments Corporation
11500 N Mopac Expwy
Austin, TX 78759-3504
Dear Eric and Michael:
I received your letter dated Thursday, June 16th, responding to our proposal
from Wednesday, May 25th (the
"Proposal") for the acquisition of all of the outstanding shares of
National Instruments Corporation ("NI") by Emerson Electric Co.
("Emerson"). I am disappointed in your response and the lack of
engagement from you and your Board to what is an extremely
attractive Proposal for the shareholders of NI.
We have followed NI for many years and believe
that the Proposal is a unique opportunity for NI shareholders to
realize a certain cash value and to accelerate the execution of
your vision to automate test across the product lifecycle. We are
offering an immediate financial benefit to your shareholders, and a
high-quality home for NI, benefiting your employees, customers,
suppliers and communities.
Our Proposal to acquire all of NI's outstanding
shares at $48 per share in cash
offers significant value to your shareholders measured against both
short and longer-term metrics, specifically a:
-
-
- 51% premium to NI's closing share price as of June 21, 2022;
- 41% premium to the volume weighted average price for the last
30 trading days ending June 21,
2022;
- 39% premium to NI's closing share price as of May 24, 2022 (the day prior to when we made the
Proposal); and
- 4% premium to the 52 week high trading price as of June 21, 2022.
We are highly confident your shareholders would
view our cash offer favorably and recent market data points
reinforce this view, including:
-
-
- The last time NI's share price closed above $48 was on December 6th,
2018. NI's share price has underperformed both the broader
market and its key peer, Keysight, since then, with the stock down
34% in a period where the NASDAQ Index gained 54% and Keysight
gained 125%;
- Four of the six brokers who cover NI have reduced their 12
month forward price targets following your Q1 earnings with the
median price target being reduced from $50 to $43.50;
and
- The top 10 active shareholders as of the end of Q1 2021 owned
approximately 19% of the company with an estimated weighted average
cost basis of $35. Over the past
year, 8 of those 10 shareholders have reduced their positions and
sold stock materially below the price we are offering.
We prefer to engage in collaborative, bilateral
discussions with minimal distraction to your management team to
reach an agreement privately. Your letter referenced "significant
and steady increases in bookings and revenue" as well as
"strengthened operational performance and advances in technology".
We look forward to learning more about your internal plan and are
confident that with access to limited non-public information after
signing an NDA, we could work with you to find additional value
that would allow us to increase our Proposal.
We are prepared to engage immediately and have
organized the resources to move towards a transaction
expeditiously, including:
-
-
- Diligence: We have performed extensive outside-in
due diligence on NI over an extended period. As a result, we have
limited and specific confirmatory due diligence requirements.
- Timing: We are ready to begin our confirmatory due
diligence exercise and we would work towards signing and announcing
a definitive agreement within four weeks.
- Regulatory: We do not anticipate any significant
regulatory risks or delays given the complementary nature of our
businesses.
- Financing: Our Proposal is not subject to any
financing condition and would be financed from cash on hand,
committed lines of credit and/or other available sources of
financing. Emerson is an A2/A rated company with a strong balance
sheet. We have obtained a Highly Confident Letter from Goldman
Sachs.
- Advisors: We have engaged Goldman Sachs & Co.
LLC and Centerview Partners LLC as our financial advisors and Davis
Polk Wardwell LLC as our legal counsel.
- Certainty: Our Board of Directors has reviewed and
supports the proposed transaction. Emerson shareholder approval
will not be required.
Emerson considers this Proposal to be of the
highest strategic priority. We are very motivated to conclude a
transaction that benefits both companies as well as our respective
shareholders. Please confirm receipt of this letter. Given the
upcoming July 4th holiday, we
recognize you may not be able to get back to us until the week of
July 11th. I look forward to hearing
from you by then at the latest.
Sincerely,
Lal Karsanbhai
President and Chief Executive Officer
July 6, 2022 – NI's First
Response to June 22 Letter
From: Eric
Starkloff
Sent: Wednesday, July 6, 2022
To: Lal Karsanbhai
Subject: Re: Follow-up to NI letter dated June 16
Lal:
I hope you had a good 4th of July
weekend. I wanted to let you know that we will be discussing your
follow-up letter at our regularly scheduled board meeting at the
end of this month. I will be in touch with you after the board
meeting to discuss.
Regards,
Eric
August 2, 2022 – NI's Second
Response to June 22 Letter
Lal Karsanbhai
President and Chief Executive Officer
Emerson Electric Co.
8000 West Florissant Avenue
PO Box 4100
St. Louis, MO 63136-8506
Dear Lal:
Our Board of Directors has carefully reviewed
your letter dated June 22, 2022, with
the assistance of our financial and legal advisors. The Board
remains unanimously of the view that your proposal is not in the
best interests of NI and its shareholders.
Sincerely,
/s/
Eric
Starkloff
President and Chief Executive Officer
/s/
Michael E.
McGrath
Chairman of the Board
November 3, 2022 – Emerson's
Third Offer Letter to NI
Eric
Starkloff
President and Chief Executive Officer
Michael E.
McGrath
Chairman of the Board
National Instruments Corporation
11500 N Mopac Expwy
Austin, TX 78759-3504
Dear Eric and Michael:
I am writing to follow up on your August 2nd response to our June 22nd letter which reiterated our proposal
for the acquisition of all of the outstanding shares of National
Instruments Corporation ("NI") by Emerson Electric Co. ("Emerson").
After receiving your terse response and continued refusal to engage
with Emerson for the benefit of NI's shareholders, we decided to
wait to see if your revised guidance, investor day communication,
and Q3 results might fundamentally alter investors' views of NI's
value or signal an acceleration in NI's outlook that we could
incorporate into our thinking before reaching out to you again.
Recap of Events of the Past Six
Months
Over a period starting almost 6 months ago, we
have consistently been prepared to provide your shareholders an
all-cash offer at a meaningful premium, which your Board has
repeatedly rebuffed and refused to provide even limited financial
information. Given the time that has elapsed, we believe the
context of our outreach, your Board's refusal to engage, and NI's
investor communications since receiving our first offer are
important to summarize:
-
-
- May 16th: My initial
outreach to you was premised on meeting in person to introduce
myself and shape a compelling all-cash offer for your shareholders.
I was surprised that you would not meet with me and instead offered
a phone call.
- May 22nd: In an
extremely brief phone call, you reiterated you would not engage and
suggested we send a letter if Emerson should want to acquire
NI.
- May 25th: I sent you
a letter describing our all-cash offer at a significant premium to
NI's current and historical trading levels. The offer was based on
public information and outlined key terms related to deal
certainty, including no financing contingency.
- June 16th: You sent a
very short response letter refusing to engage, with limited
elaboration to your Board's reasons.
- June 22nd: After your
negative response on June 16th, I
again attempted to engage with you with a second letter describing
our all-cash offer on June 22nd in
which I requested access to limited additional information to help
find additional value to improve our proposal and asked for a
response by July 11th.
- July 6th: You
responded that you could not get back to me by July 11th, and instead would get back to me after
your earnings call at the end of the month.
- July 28th Q2 Earnings
Call: Despite solid order momentum, NI's performance
demonstrated continued challenges to expanding margins, with gross
margins down year-over-year by more than 400 bps and only a 2%
incremental margin on 14% sales growth. With the knowledge of our
approach (that you did not disclose to your shareholders), and
despite the headwinds and weak financial performance, you
substantially increased your outlook for 2023, guiding to a
mid-teens topline growth rate and 300 basis points of margin
improvement, a margin improvement three times larger than your
prior guidance only three months earlier when you released 1st
quarter earnings, at a time when you were not aware of Emerson's
interest in acquiring NI.
- August 2nd: You sent
a second, similarly curt response letter refusing to engage.
- August 11th: You
announced you would hold your annual investor day on September 15th.
- September 15th Investor
Day: You reaffirmed the same 2023 guidance as provided
with Q2 earnings and provided additional guidance to achieve a
further 200 bps operating margin expansion by 2025. Despite your
positive tone, your shares fell 3.2% on the day, underperforming
the market as investors and analysts continue to doubt NI's ability
to execute and deliver these results given its historical
track-record and the current operating environment. In particular,
the market remains unconvinced about NI's ability to expand EBIT
margins through software and system-level solutions as well as the
sustainability of order trends and NI's ability to capitalize on
secular opportunities in ADAS/EVs/5G.
- October 27th Q3
Earnings: Despite achieving record quarterly revenue, NI's
share price declined 3.0% the next day (a day in which the NASDAQ
Index was up 2.9%) given decelerating order rates, as well as
continued supply chain challenges and the potential impact of a
deteriorating macro. NI's Q4 guidance was below street
expectations, despite reaffirming the margin expansion guidance for
2023. Since your announcement, research has highlighted how NI
continues to be a "wait and see" company as evidence of margin
expansion was pushed out once again. The market is particularly
concerned about your ability to achieve your expected growth in the
face of a worsening economic outlook in many markets, particularly
in your portfolio businesses. Factoring in these uncertainties,
almost all brokers revised their estimates for both Q4 and 2023
downwards as well as their target prices
Improved Proposal
From our first outreach, we have preferred to
engage with you privately and have been committed to improving our
offer to reflect the outlook for your company incorporating the
latest financial information. Although we question the motivations
for your updated guidance, we do believe in the long-term potential
of the NI business under Emerson's leadership and, in the spirit of
achieving engagement, we are willing to incorporate your updated
outlook to improve our offer. As such, we are increasing our
Proposal, from $48 per share to
$53 per share (our "Improved
Proposal").
Under our Improved Proposal, Emerson proposes to
purchase 100% of the outstanding common stock of NI for
$53 in cash per common share which
implies an equity value of $7.1
billion and an enterprise value of $7.6 billion. Our Improved Proposal delivers
compelling all cash value and provides credit for significant
future earnings, including your recently updated guidance. Rather
than wait for you to achieve an uncertain 2023, our cash offer
gives your shareholders immediate credit today. The offer provides
substantial premiums to both current and historical metrics,
specifically:
-
-
- 45% premium to NI's closing share price as of November 3, 2022;
- 37% premium to the volume weighted average price for the last
30 trading days ending November 3,
2022;
- 53% premium to NI's closing share price as of May 24, 2022 (the day prior to when we made the
original Proposal).
For reference, the last time NI's share price
closed above $53 was on March 12th, 2018. Since then, NI's share price
has underperformed both the broader market and its key peer,
Keysight, with the stock down 31% in a period where the NASDAQ
Index gained 36% and NI's closest peer Keysight gained 206%.
Emerson is Prepared to Move Quickly
We believe this Improved Proposal presents the
best and most certain path to maximize value for NI shareholders.
We are prepared to engage with NI's Board and management team
immediately and have organized the resources to work towards a
transaction expeditiously.
To emphasize the level of work completed and
ability to move with certainty and speed, we reiterate to you our
proposed next steps consistent with our prior letters:
-
-
- Diligence: We have performed extensive outside-in
due diligence on NI over an extended period. As a result, we have
limited and specific confirmatory due diligence requirements
only.
- Timing: We are ready to begin our confirmatory due
diligence exercise and we would work towards signing and announcing
a definitive agreement within four weeks.
- Regulatory: We do not anticipate any significant
regulatory risks or delays given the complementary nature of our
businesses.
- Financing: Our Proposal is not subject to any
financing condition and would be financed from cash on hand,
committed lines of credit and/or other available sources of
financing. Emerson is an A2/A rated company with a strong balance
sheet. We have obtained a Highly Confident Letter from Goldman
Sachs.
- Advisors: We have engaged Goldman Sachs & Co.
LLC and Centerview Partners LLC as our financial advisors and
Davis Polk & Wardwell LLP as our
legal counsel. We have also engaged Joele
Frank on public relations and Innisfree as our proxy
solicitor.
- Certainty: Our Board of Directors has reviewed and
supports the proposed transaction. Emerson shareholder approval
will not be required.
Next Steps
We have invested considerable time and resources
and remain fully committed to pursuing this transaction. It is our
sincere hope that your Board—having had multiple opportunities to
communicate its strategy and outlook to the market with no material
change in NI's share price—will view this Improved Proposal
favorably and now engage with us in a constructive dialogue. While
it is our preference to work with your Board privately and
collaboratively towards a potential transaction, another refusal to
engage will force us to ensure your shareholders can assess our
Improved Proposal directly. In preparation for all options, we
would note:
-
-
- We have accumulated 2.3 million NI shares in the open market
and intend to file for HSR approval to facilitate additional
purchases; and
- Given your Board's repeated attempts to move NI's share price
higher have been unsuccessful, your remaining defense is neither
your operational strategy nor shareholder support for management
but rather NI's staggered board. As such, we are prepared to run a
slate of directors specifically targeting the two members up for
re-election, your Chairman and former CEO, which will provide NI's
shareholders with an opportunity to express their views to your
Board on its refusal to engage with us.
I continue to be available to meet with you at
your convenience and have also instructed our financial and legal
advisors to make themselves available to meet with your advisors.
Given you have now been in possession of a Proposal from Emerson
since May, and now an Improved Proposal, I request that you respond
promptly to this letter. I look forward to hearing a more
constructive answer and stand ready to engage.
Sincerely,
Lal Karsanbhai
President and Chief Executive Officer
November 15, 2022 – NI's
Response to November 3 Letter
Lal Karsanbhai
President and Chief Executive Officer
Emerson Electric Co.
8000 West Florissant Avenue
PO Box 4100
St. Louis, MO 63136-8506
Dear Lal:
We wanted to follow-up on our initial
confirmation of receipt of your November 3,
2022 letter. NI and its Board of Directors take your
proposal seriously, in accordance with our fiduciary duties. We
have established a working group of the Board to examine your
proposal in greater detail, as we examine and evaluate options with
the assistance of our advisors, inclusive of other prospective
purchasers and transaction partners.
Sincerely,
/s/
Eric
Starkloff
President and Chief Executive Officer
/s/
Michael E.
McGrath
Chairman of the Board
November 16, 2022 – Emerson's
Response to NI
From: Lal Karsanbhai
Sent: Wednesday, November 16,
2022
To: Eric Starkloff; Michael McGrath
Subject: Re: Follow up to NI letter dated August 2nd
Michael and Eric:
I received your letter dated November 15th in response to our November 3rd letter.
We are pleased to hear that you have established
a working group of the Board to evaluate our proposal and other
strategic alternatives. I would like our respective advisors to
speak before Thanksgiving so we can better understand your process
and the timeline to evaluate our proposal and other options. Please
advise me of the contact details of your advisers and I will have
my advisers from Goldman and Centerview reach out to them.
Separately, as mentioned in our November 3rd letter, Emerson will be filing for
HSR approval to acquire additional shares of National Instruments
Corporation. Attached please find the required notice of such
filing and of your company's HSR filing obligation.
Sincerely,
Lal
November 21, 2022 – NI's
Response to Emerson
From: Eric
Starkloff
Sent: Monday, November 21, 2022
To: Lal Karsanbhai; Michael
Mcgrath
Subject: Re: Follow up to NI letter dated August 2nd
Lal:
We received your email on November 16th responding to our letter of
November 15th. As previously
confirmed to you, NI and its Board of Directors take your proposal
seriously, in accordance with our fiduciary duties, and a working
group of the Board has been established to examine your proposal in
greater detail, as we examine and evaluate options, inclusive of
other prospective purchasers and transaction partners.
While it would be premature for our advisors to
meet at this time, we will consider a future meeting with
representatives from the working group and management after the
Thanksgiving holiday.
Sincerely,
Eric
December 7, 2022 – Emerson's
Request to NI for Director and Officer Questionnaire
From: Lal Karsanbhai
Sent: Wednesday, December 7, 2022
To: Eric Starkloff
Subject: Re: Re: Re: Follow up to NI letter dated August 2nd
Eric:
We received your email on November 21st responding to our email of
November 16th requesting that our
advisors meet before Thanksgiving. You advised that it would
be premature for our advisors to meet at that time.
You have had our Revised Proposal since
November 3rd and over two weeks have
passed since your last communication. In your email, you
advised that you had established a working group of the Board, and
you would consider a meeting with representatives from the working
group and management after the Thanksgiving holiday. Please
provide an update on your process and advise when the advisors can
connect, as well as timing for the meeting with the working group
and management.
In addition, pursuant to NI's Bylaws, a
stockholder proposing to nominate directors for election at the
next AGM is required to submit two documents in the form provided
by the Company Secretary. Attached please find a request for
both documents and related confirmations for delivery to the
Secretary. As the nomination window opens shortly
(Wednesday, December 28, 2022), we
would appreciate a timely response and in any case before the
deadline stated in the attachment.
Sincerely,
Lal
December 14, 2022 – Emerson's
Section 220 Demand Letter and Follow Up to December 7 Request
From: Sara
Bosco
Sent: Wednesday, December 14,
2022
To: Eddie Dixon
Subject: EMR Demand Letter and Response to NI Letter Dated
December 14, 2022
Dear Mr. Dixon,
Attached please find Emerson's demand as a
stockholder of National Instruments Corporation ("NI") for
inspection of books and records of NI. Please note the
statutorily mandated initial compliance date of Thursday, December 22, 2022 and continuing
thereafter through NI's next annual general meeting of its
stockholders. The attached demand provides the contact
information for coordinating NI's response through Emerson's
outside counsel, Davis Polk.
I also would like to follow-up on my letter
dated Wednesday, December 7, 2022 to
you requesting documentation mandated by NI's bylaws in connection
with the nomination of directors and your letter earlier
today. In your letter you advised that you will provide the
documents "shortly" without more specificity. We are
concerned that NI's delay in responding to this straightforward
request will frustrate or impair Emerson's ability to nominate
directors. We ask that NI respond fully to the request no
later than Sunday, December 18,
2022. In that regard, we ask that you provide the
supplemental information requested in my December 7 letter in addition to the two
documents.
We look forward to prompt and complete responses
on all of the above matters.
Sincerely,
Sara Yang Bosco
December 14, 2022 – NI's
Request for a Call with Emerson
From: Eric
Starkloff
Sent: Wednesday, December 14,
2022
To: Lal Karsanbhai
Subject: Re: Re: Re: Follow up to NI letter dated August 2nd
Lal:
I'd like to schedule a call with you later this
week to discuss next steps and a potential meeting. I can be
available Thursday between 11:30 and 2:00 and after 3:30 CST, and Friday any time before
noon. Let me know what works for you.
(And regarding the two bylaw documents referred
to in your note, my GC Eddie Dixon will be separately replying to
your counsel to get that addressed.)
Regards,
Eric
December 14, 2022 – NI's
Response to Emerson
Sara Bosco,
Esq.
Senior Vice President, Secretary and Chief Legal Officer
Emerson Electric Co.
8000 West Florissant Avenue
PO Box 4100
St. Louis, MO 63136-8506
Dear Ms. Bosco:
This is to confirm that we are in receipt of
your request regarding the materials referenced in our bylaws, and
that we will provide you with the documents referenced in our
bylaws shortly.
Sincerely,
/s/
R. Eddie Dixon,
Jr.
Chief Legal Officer, Senior Vice President & Secretary
December 16, 2022 – NI's Email
Confirming January 4 Meeting with
Emerson
From: Eric
Starkloff
Sent: Friday, December 16, 2022
To: Lal Karsanbhai
Subject: Re: Re: Re: Re: Follow up to NI letter dated August 2nd
Lal,
Following up on our call yesterday, just to
confirm that your suggestion of getting together the first week of
January in Austin works for us,
and I'm looking forward to seeing you in person. Does
Wednesday, January 4 work for
you? If so, we can work to arrange the logistics. And
based on your comments around the areas you are interested in
learning more about our business, I think the meeting will be a
mutually valuable one.
In preparation for that information sharing,
I'll have our lawyers at Wachtell Lipton (Adam Emmerich, Sabastian
Niles and Lina Tetelbaum)
send along a proposed NDA. Please let me know who they should
send it to from your advisor team. As we discussed yesterday,
we are not seeking to prevent you from making board nominations for
our next annual meeting, and expect we can get the NDA organized
and agreed in short order.
Looking forward to seeing you in January.
Best wishes for a happy holidays.
Eric
January 11, 2023 – Emerson's
Fourth Offer Letter to NI
Eric
Starkloff
President and Chief Executive Officer
Michael E.
McGrath
Chairman of the Board
National Instruments Corporation
11500 N Mopac Expwy
Austin, TX 78759-3504
Dear Eric and Michael:
I am writing to follow up on our November 3rd letter which outlined our improved
proposal for the acquisition of all of the outstanding shares of
National Instruments Corporation ("NI") by Emerson Electric Co.
("Emerson").
We appreciate you and your team hosting us in
Austin on January 4th and the one follow-up call between
the teams on January 9th. As you have
seen through our discussions, we have a deep understanding of the
test and measurement sector and specifically NI. While it has been
helpful to receive some additional information on your business and
plans, the superficial information your team shared has not
addressed the 30 focused questions that we provided ahead of time,
and as such we are not yet able to change our view on the financial
outlook for NI.
Based on what you have shared to date, we
reiterate our proposal for Emerson to purchase 100% of the
outstanding common stock of NI for $53 in cash per common share. Our offer provides
shareholders with credit today for significant future earnings,
including your recently updated guidance at attractive
premiums:
-
-
- 37% premium to NI's closing share price as of January 10, 2023; and
- 45% premium to NI's closing share price as of November 3, 2022 (when we increased our proposal
to $53 a share).
From our first outreach in May 2022, we have attempted to work with you
privately to see if we could reach a deal and we are highly
confident we could announce a deal within days and by no later than
your Q4 results on January 31st. To
that end, we would be willing to extend the standstill agreement by
one week and may see the potential for a very modest increase in
value, subject to the following:
-
-
- Receiving the outstanding business diligence responses to our
prioritized list of 30 questions that we shared on January 6th, as outlined in Annex A;
- Receiving details on all changes in compensation and benefits,
equity awards (regular or special) made and anticipated, beyond
what has previously been disclosed in NI's SEC filings so we can
determine if there are meaningful new costs incurred that may
impact our ability to modestly increase our offer;
- Davis Polk will share with
Wachtell a draft merger agreement reflective of our proposal and we
expect meaningful engagement on negotiating the agreement and
aligning on key deal terms;
- Arranging discussions between bankers to agree and align on the
process and timeline to announcing a transaction by your Q4
results, and;
- Receiving a full response from your outside counsel to the
information requested pursuant to the Section 220 Demand for
Stockholder Information which we are entitled to as holders of 2.3
million shares of NI.
We believe our offer is compelling and that
there is a path to working with your Board privately and
collaboratively towards a potential transaction. We are in a
position to move very quickly to finalize customary confirmatory
diligence and negotiate the merger agreement, and subject to
receiving the information requested, may see the potential for a
very modest increase in value. However, if you are not willing to
share the information requested, it will require us to reach out to
your shareholders directly.
I look forward to hearing from you promptly.
Sincerely,
Lal Karsanbhai
President and Chief Executive Officer
About Emerson
Emerson (NYSE: EMR) is a global technology and software company
providing innovative solutions for the world's essential
industries. Through its leading automation portfolio, including its
majority stake in AspenTech, Emerson helps hybrid, process and
discrete manufacturers optimize operations, protect personnel,
reduce emissions and achieve their sustainability goals. For more
information, visit Emerson.com.
Additional Information and Where to Find It
This communication relates to a proposal which Emerson Electric
Co. ("Emerson") has made for a business combination transaction
with the Company (the "Proposed Transaction"). It is anticipated
that Emerson, together with the participants named therein, will
file a proxy statement and accompanying WHITE proxy card with the
Securities and Exchange Commission ("SEC") to be used to solicit
votes for the election of a slate of director nominees identified
and nominated by Emerson (the "Nominees") at the 2023 annual
meeting of stockholders of National Instruments Corporation, a
Delaware corporation (the
"Company") and may file other proxy statements and/or other
documents.
This communication does not constitute an offer to buy or sell
or the solicitation of an offer to buy or sell any securities or a
solicitation of any vote or approval. This communication is not a
substitute for any proxy statement or other documents Emerson may
file with the SEC in connection with the election of the Nominees
or the Proposed Transaction.
BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY
ANY PROXY STATEMENT(S) AND/OR OTHER DOCUMENTS IF AND WHEN THEY ARE
FILED BY EMERSON, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE
DOCUMENTS, IN CONNECTION WITH THE ELECTION OF THE NOMINEES AND/OR
THE PROPOSED TRANSACTION, BECAUSE THESE DOCUMENTS CONTAIN OR WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE ELECTION OF THE NOMINEES,
THE PROPOSED TRANSACTION, AND RELATED MATTERS. Any definitive
proxy statement(s) (including any WHITE proxy card enclosed with
any definitive proxy statement(s) or supplements filed and/or
disseminated by Emerson) (if and when available) will be mailed or
otherwise made available to stockholders of the Company.
Investors and security holders will be able to obtain free copies
of these documents filed with the SEC if and when available without
charge through the website maintained by the SEC at www.sec.gov or,
in the case of documents filed by Emerson, by contacting the
investor relations department of Emerson:
Emerson
8000 West Florissant Avenue, P.O. Box 4100
St. Louis, MO
www.emerson.com/en-us/investors
Investor Relations:
Colleen Mettler, Vice
President
(314) 553-2197
investor.relations@emerson.com
Innisfree M&A Incorporated
Scott Winter / Jonathan Salzberger
(212) 750-5833
Participants in the Solicitation
Emerson and the Nominees are anticipated to be participants in
the solicitation of proxies in connection with the election of the
Nominees as directors of the Company.
Information regarding the persons who may, under the rules of
the SEC, be deemed participants in the solicitation of proxies in
connection with the election of the Nominees as directors of the
Company and/or the Proposed Transaction, including a description of
their direct or indirect interests in such matters, by security
holdings or otherwise, will be set forth in any proxy statement(s)
and other relevant materials related to such matters if and when
they are filed with the SEC.
Caution Concerning Forward-Looking Statements
This communication contains "forward-looking" statements as that
term is defined in Section 27A of the Securities Act and Section
21E of the Exchange Act, as amended by the Private Securities
Litigation Reform Act of 1995. All statements, other than
historical facts, are forward-looking statements, including:
statements regarding the expected timing and structure of the
proposed transaction; the ability of the parties to negotiate,
enter into and complete the proposed transaction; the expected
benefits of the proposed transaction, such as improved operations,
enhanced revenues and cash flow, synergies, growth potential,
market profile, business plans, expanded portfolio and financial
strength; the competitive ability and position of Emerson following
completion of the proposed transaction; legal, economic and
regulatory conditions; and any assumptions underlying any of the
foregoing. Forward-looking statements concern future circumstances
and results and other statements that are not historical facts and
are sometimes identified by the words "may," "will," "should,"
"potential," "intend," "expect," "endeavor," "seek," "anticipate,"
"estimate," "overestimate," "underestimate," "believe," "plan,"
"could," "would," "project," "predict," "continue," "target" or
other similar words or expressions or negatives of these words, but
not all forward-looking statements include such identifying words.
Forward-looking statements are based upon current plans, estimates
and expectations that are subject to risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated or
anticipated by such forward-looking statements. We can give no
assurance that such plans, estimates or expectations will be
achieved and therefore, actual results may differ materially from
any plans, estimates or expectations in such forward-looking
statements. Important factors that could cause actual results to
differ materially from such plans, estimates or expectations
include, among others: (1) the outcome of any discussions between
Emerson and the Company with respect to the proposed transaction,
including the possibility that the parties will not agree to pursue
a business combination transaction or that the terms of any such
transaction will be materially different from those described
herein, (2) that one or more closing conditions to the proposed
transaction, including certain regulatory approvals, may not be
satisfied or waived, on a timely basis or otherwise, including that
a governmental entity may prohibit, delay or refuse to grant
approval for the consummation of the proposed transaction, may
require conditions, limitations or restrictions in connection with
such approvals or that any required approval by the stockholders of
the Company may not be obtained; (3) the risk that the proposed
transaction may not be completed in the time frame expected, or at
all; (4) unexpected costs, charges or expenses resulting from the
proposed transaction; (5) uncertainty of the expected financial
performance of Emerson following completion of the proposed
transaction; (6) failure to realize the anticipated benefits of the
proposed transaction, including as a result of delay in completing
the proposed transaction or integrating the business of the Company
with the business of Emerson; (7) the ability of Emerson to
implement its business strategy; (8) difficulties and delays in
achieving revenue and cost synergies; (9) inability to retain and
hire key personnel; (10) the occurrence of any event that could
give rise to termination of the proposed transaction; (11)
potential litigation in connection with the proposed transaction or
other settlements or investigations that may affect the timing or
occurrence of the contemplated transaction or result in significant
costs of defense, indemnification and liability; (12) evolving
legal, regulatory and tax regimes; (13) changes in economic,
financial, political and regulatory conditions, in the United States and elsewhere, and other
factors that contribute to uncertainty and volatility, natural and
man-made disasters, civil unrest, pandemics (e.g., the coronavirus
(COVID-19) pandemic (the "COVID-19 pandemic")), geopolitical
uncertainty, and conditions that may result from legislative,
regulatory, trade and policy changes associated with the current or
subsequent U.S. administration; (14) the ability of Emerson and the
Company to successfully recover from a disaster or other business
continuity problem due to a hurricane, flood, earthquake, terrorist
attack, war, pandemic, security breach, cyber-attack, power loss,
telecommunications failure or other natural or man-made event,
including the ability to function remotely during longterm
disruptions such as the COVID-19 pandemic; (15) the impact of
public health crises, such as pandemics (including the COVID-19
pandemic) and epidemics and any related company or governmental
policies and actions to protect the health and safety of
individuals or governmental policies or actions to maintain the
functioning of national or global economies and markets, including
any quarantine, "shelter in place," "stay at home," workforce
reduction, social distancing, shut down or similar actions and
policies; (16) actions by third parties, including government
agencies; (17) potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the
transaction; (18) the risk that disruptions from the proposed
transaction will harm Emerson's and the Company's business,
including current plans and operations; (19) certain restrictions
during the pendency of the acquisition that may impact Emerson's or
the Company's ability to pursue certain business opportunities or
strategic transactions; (20) the ability to meet expectations
regarding the accounting and tax treatments of the proposed
transaction; and (21) other risk factors as detailed from time to
time in Emerson's and the Company's reports filed with the SEC,
including Emerson's and the Company's annual report on Form 10-K,
periodic quarterly reports on Form 10-Q, periodic current reports
on Form 8-K and other documents filed with the SEC. These risks, as
well as other risks associated with the proposed transaction, will
be more fully discussed in any proxy statement(s) and other
relevant materials related to the proposed transaction if and when
they are filed with the SEC. While the list of factors presented
here is, and the list of factors to be presented in any such proxy
statement(s) or materials will be, considered representative, no
such list should be considered to be a complete statement of all
potential risks and uncertainties. Unlisted factors may present
significant additional obstacles to the realization of
forward-looking statements. Any forward-looking statements speak
only as of the date of this communication. Emerson undertakes no
obligation to update any forward-looking statements, whether as a
result of new information or development, future events or
otherwise, except as required by law. Readers are cautioned not to
place undue reliance on any of these forward-looking
statements.
Contacts
Investors:
Colleen Mettler
Vice President, Investor Relations
(314) 553-2197
Media:
Jim Golden / Joseph Sala / Tanner
Kaufman
Joele Frank, Wilkinson Brimmer
Katcher
(212) 355-4449
1 Hart-Scott-Rodino Antitrust
Improvements Act of 1976
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SOURCE Emerson