Emerson Plans to Merge Industrial-Software Businesses With AspenTech
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Emerson Electric Co. (-2.6%) plans to merge two of its software businesses with Aspen Technology Inc. (+12.3%) in a roughly $11 billion deal aimed at capturing growing demand for industrial technology. The cash-and-stock transaction would value AspenTech, as the company is known, at around $160 a share, officials from the companies said. AspenTech's shareholders would receive $87 and 0.42 share of the combined company for each share they currently own. The transaction is expected to be announced Monday. Bedford, Mass.-based AspenTech makes software for companies in industries including chemicals, mining and energy streamline engineering and maintenance processes. It had roughly $700 million of revenue for its fiscal year, ended in June. Emerson, a larger industrial conglomerate, is based in St. Louis. It makes products ranging from Ridgid pipe wrenches to software for power plants and has a market value of around $58 billion following a sharp rise in the stock since early last year. Emerson, which is also contributing roughly $6 billion in cash as part of the deal, would own 55% of the new entity on a fully diluted basis. AspenTech shareholders would own the rest.
The Swiss stock market ended trading at the beginning of the week with a slight gain. Concerns about high inflation continue to be the dominant theme among investors, as the market is eagerly awaiting the midweek US consumer price index (CPI). The SMI gained 0.1 per cent to 11,772 points. Among the 20 SMI stocks, there were 10 price losers and 10 price winners. 22.66 (previously: 30.79) million shares were traded. Holcim (-1.4%) was the worst performer in the SMI. Comments by analysts put pressure on the share price. UBS, for example, assumes that the growth of the building materials group was more restrained in the third quarter. The experts at Jefferies also expect a "not exactly exciting" third quarter result. Richemont was the day's winner with a gain of 0.9 per cent. Roche (+0.6%) also held up well. The pharmaceutical group received breakthrough therapy status from the US Food and Drug Administration (FDA) for its drug Gantenerumab for the treatment of people with Alzheimer's disease. The other two index heavyweights Novartis (+0.1%) and Nestle (-0.3%), however, lost out. Among the financials, UBS (+0.5%) gained and Credit Suisse closed 0.3 per cent higher. For the analysts at Jefferies, however, Credit Suisse's risk-return profile is unattractive compared to peers. The bank's earnings have come under pressure from lower net interest income and transaction-based revenues and are likely to remain below consensus estimates, analysts said.
European equity markets closed mixed on Monday, supported by the energy sector which benefited from higher oil prices, while investors are concerned about the impact of the rise on other sectors. The Stoxx Europe 600 index gained 0.1% to 457.5 points. In Paris, the CAC 40 and the SBF 120 gained 0.2% each. In Frankfurt, the DAX 40 gave up 0.1%, while the FTSE 100 in London gained 0.7%. CGG (+17.6%) expects third-quarter revenues of about $270 million (€233 million), up 35% year-on-year, while oil prices have soared 120% in the same period. CGG will publish its third quarter results this year on 3 November, after the Paris stock exchange closes. Oil and gas stocks made further gains, buoyed by rising oil prices. In Paris, Vallourec gained 5.8% and TotalEnergies 2%. In London, BP rose 1.9% and Shell 1.7%. In Milan, ENI rose by 1.3%, and in Amsterdam Fugro gained 4%. Carrefour (-2.9%) refused a public exchange offer of €16.5 billion from French rival Auchan, several media reported since Friday. ASOS dropped 7% after the online fashion retailer warned of lower full-year earnings amid supply-chain pressures and higher costs and said chief executive Nick Beighton was stepping down. "The market had a sense that life has been a bit of struggle for ASOS, given the gloomy update from rival Boohoo in recent days which seemed to confirm the fast-fashion industry was not enjoying the best of times," said AJ Bell investment director Russ Mould. "The near-term outlook is somewhat bleak for the company. Sales growth is expected to slow quite dramatically, cost pressures and supply-chain problems could remain for a while, which means profit margins will be squeezed, and consumer uncertainty could result in volatile trading. " The biggest gainer in the FTSE 100 was mining giant Anglo American, which rose 3%. Other gainers included copper miner Antofagasta and silver miner Fresnillo.
U.S. stocks fell on Monday on worries about slowing growth and mounting inflation, punctuated by a rally in oil prices. The S&P 500 slid 30.15 points, or 0.7%, to 4361.19. Stocks rose in the morning but later turned lower, with losses accelerating in the last minutes of trading. The Dow Jones Industrial Average declined 250.19, or 0.7%, to 34496.06. The technology-heavy Nasdaq Composite dropped 93.34, or 0.6%, to 14486.20. Front-month U.S. oil futures climbed 1.5% to settle at $80.52 per barrel, their highest level since 2014. Futures on Brent crude, the global oil benchmark, rose 1.5% to $83.65 a barrel, their highest settle value in three years. Meanwhile, gains in industrial metals lifted mining stocks. Freeport-McMoRan advanced $1.10 a share, or 3.2%, to $35.23, making it one of the best-performing stocks in the S&P 500 on Monday. Copper futures in New York rose 2.1% to settle at about $4.37 a pound, a three-week high. Concerns about the combination of inflation and slowing growth have dogged markets in recent weeks. Inflation has proved stickier than expected, brought on by supply-chain disruptions, labor shortages and surging energy prices. Meanwhile, the pace of the post-pandemic recovery has slowed. Investors are also looking ahead to the third-quarter earnings season, which kicks off this week. Corporate earnings could shed light on how price increases are affecting companies, while companies’ revenue and profit projections will show how optimistic executives are about growth and consumer spending. Companies set to report later in the week include Delta Air Lines, Domino’s Pizza and JPMorgan Chase. Among individual stocks, Southwest Airlines shares slid $2.25, or 4.2%, to $51.67 as the carrier canceled hundreds of flights on Monday, following roughly 1,900 flight cancellations over the weekend. Severe weather in Florida and air-traffic-control issues caused the wave of disruptions. Bitcoin added to recent gains, climbing to its highest levels since early May. The digital currency was trading at roughly $57,390 at 5 p.m. ET on Monday, up more than 3% over the previous 24 hours. The bitcoin rally lifted shares of crypto-exchange operator Coinbase Global, which rose $8.36, or 3.4%, to close at $256.50.
The stock markets in East Asia showed pronounced declines on Tuesday. After the holiday break on Monday, the Kospi in Seoul recorded the biggest drop with a minus of 1.4 per cent. Shares of index heavyweight Samsung Electronics are down 3.1 per cent and SK Hynix is down 1.7 per cent. The Hang Seng Index in Hong Kong loses 1.0 per cent. Alibaba shares fall by 3.2 per cent. The Nikkei 225 in Tokyo holds up comparatively well with a discount of 1.0 per cent. Here, strong gains in export stocks supported sentiment. The reason being the continued depreciation of the yen.
The yield on the German 10-year Bund was -0.118%, down from -0.148% on Friday evening. The yield on the US Treasury bond of the same maturity ended at 1.613% on Friday evening. U.S. bond markets were closed on Monday for a federal holiday.
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