Chinese companies among three likely bidders for Emerson's Leroy-Somer: sources

Fri Jul 8, 2016 5:54am EDT
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By Arno Schuetze and Gilles Guillaume

FRANKFURT/PARIS (Reuters) - Emerson Electric's EMR.R alternator business Leroy-Somer is expected to attract firm offers from two Chinese companies and a buyout group in a potential 1 billion euro ($1.1 bln) deal, people close to the matter said.

Private equity group Clayton Dubilier & Rice (CD&R), as well as Wolong Electric (600580.SS: Quote) and another Chinese company are conducting due diligence on Leroy-Somer and preparing to submit final bids this month, the sources said.

Emerson wants to focus its business on process automation and heating and air conditioning. In April it launched the sale of its Motors and Drives unit, which consists mainly of Leroy- Somer which makes alternators for power producers and industrial applications. It aims to chose a buyer before the August summer break, one of the sources said.

CD&R declined to comment, while Emerson and Wolong were not immediately available for comment.

Strategic buyers often have an edge over private equity groups in such acquisitions as they are usually able to reap cost savings from combining their own with the acquired business.

In this case, however, private equity investor CD&R is seen as having the advantage of deep knowledge of the business.

One of its partners, James G. Berges, is a former vice chairman and president of Emerson, where he was among executives responsible for the company's motors and appliance components businesses. George Tamke, a retired operating partner at CD&R, is a former co-CEO of Emerson.

Wolong Electric, which has bought several smaller companies this year, would, if successful in the sale, add to a string of recent Chinese acquisitions in Europe.   Continued...

Emerson Electric Company Canadian headquarters is shown in Markham February 7, 2012.    REUTERS/Mike Cassese