Shares of Aspen Technology (AZPN) are on fire this week. The stock closed Thursday's trading 18.7% above last Friday's closing price, according to data from S&P Global Market Intelligence. The fuel for this big move came from a generous buyout offer.
Industrial giant Emerson Electric (EMR 0.59%) will merge its software operations with AspenTech, adding a $6 billion cash contribution to the reformed company. Emerson becomes the majority shareholder of AspenTech with a 55% stake. The remaining 45% remains in the hands of current AspenTech shareholders.
All told, each existing AspenTech share will be exchanged for an $87 cash payment and 0.42 shares of the new AspenTech company.
Emerson's software business consists of a well-respected geological simulation platform and the recently acquired energy management company Open Systems International. Putting these operations together with AspenTech's asset management expertise, Emerson envisions an accelerated growth trajectory with "synergies on both sides of the table," according to Emerson CEO Lal Karsanbhai.
The deal will nearly double AspenTech's employee count and boost its annual revenue by roughly 60%. Emerson's software units will also contribute positive earnings before interest, taxes, depreciation, and amortization (EBITDA) to AspenTech's bottom line. For a certain subset of Emerson's and AspenTech's shared clients, the reformed business will provide an end-to-end software platform for everything from project planning and engineering to automated manufacturing and maintenance scheduling.
Assuming that the offer passes the usual regulatory challenges and shareholder votes, the new company will still be known as AspenTech and the ticker symbol won't change. The deal should close in the second calendar quarter of 2022. In the meantime, AspenTech's stock is likely to stay close to the final buyout price. Therefore, this stock isn't terribly interesting to growth investors over the next six to nine months but you could see AspenTech as a safe haven for your value-preserving investment needs.