Emerson Electric to step up acquisitions and divestitures

ST. LOUIS – Industrial conglomerate Emerson Electric Co. expects to step up both acquisitions and divestitures in the next four years and will increase investments in technology and emerging markets amid recession in Europe and slower growth in the United States and China.

The maker of factory automation systems and technology used in oil and gas production trimmed its long-term sales forecast to a range of $31 billion to $35 billion annually. A year ago, the bottom end of the range was $32 billion.

The company said it expects 2012 sales to reach $25 billion, helped by growth in its home market, including a bounceback in housing and commercial construction. It said its backlog and other metrics suggest revenue growth will be stronger in the second half than in the first half.

“China is still weak but will come back … Europe is in a recession,” Chief Executive David Farr said. “The key market for us will be the U.S.”

Farr said he expects emerging markets to account for the bulk of Emerson’s growth between now and 2015, and the company will step up investments there and in technology.

Emerson expects to spend $5 billion to $6 billion on acquisitions between now and 2015, he said, especially in industrial automation and process management segments. Emerson will divest $2 billion to $3 billion of assets in that period, including its Knaack storage equipment unit, Farr said.

Such moves were a response to “more challenging” markets, he said, with uneven economic growth, mergers among its customers and an uncertain outlook for debt-laden developed markets.

“We’re going to drive our growth,” Farr said. “We can’t sit back on our ass and wait for it to come to us.”

Farr, who has led the industrial conglomerate since 2000, is known for blunt commentary on the markets where Emerson does business. Last year, he was among the first to identify a likely European recession. Emerson investors and analysts consider the company one of the best-run U.S. manufacturers.

Emerson shares were down 2.9 percent at $51.28 in morning trade on the New York Stock Exchange.

Inernational Paper-Temple Inland deal gets U.S. antitrust OK

MEMPHIS, Tenn. – International Paper Co. won U.S. antitrust approval to acquire rival Temple-Inland Inc on the condition that they divest three mills that make paper for corrugated boxes, the U.S. Justice Department said on Friday.

Without the divestitures, the combined company would have had control of 37 percent of the North American capacity for containerboard, which is used to make corrugated boxes, the department said.

Under a consent decree, Temple-Inland will sell its mills in Waverly, Tenn., and Ontario, Calif., and International Paper will divest either its mill in Oxnard, Calif., or one in Henderson, Ky.

“With the mill divestitures, the transaction can proceed and American consumers and businesses across the country can be assured that competition is preserved in this important industry that is vital to the U.S. economy,” said Sharis Pozen, the acting head of the Justice Department’s antitrust division.

Temple-Inland agreed to be acquired in September after International Paper sweetened its offer to $3.7 billion.