Vertiv offloads ASCO for US$1.25B

Vertiv offloads ASCO for US$1.25B

The power switch business "fell outside" Vertiv's strategic focus

Vertiv, formerly known as Emerson Power Networks, is selling off its ASCO power switch business to Schneider Electric for US$1.25 billion.

It is anticipated that the deal will allow Vertiv to apply additional resources toward business and technological advancements in its core data center, telecommunications and commercial and industrial markets, according to parent company, Platinum Equity, which announced the deal on 27 July.

Platinum Equity, a US-based private equity firm, along with a host of co-investors, acquired Emerson’s Network Power business in late 2016 for around US$4 billion.

Under the ownership of Platinum Equity, which also happens to be the private equity player that snapped up Staples’ business in Australia and New Zealand earlier this year, the Network Power business was subsequently re-branded as Vertiv.

“As Vertiv has repositioned itself after being sold to Platinum Equity in November 2016, it became clear that ASCO’s strengths in the automatic transfer switch arena fell outside the new organization’s more focused strategy, said Vertiv CEO, Rob Johnson, in a statement.

“This sale is a significant step forward in our evolution as the premier provider of digital critical infrastructure solutions.

“This is consistent with our strategy of focusing on our customers and aligning the strengths of our organization –  deep domain knowledge in IT and facilities applications, global scale and service coverage  – to better meet their needs,” he said.

At the same time, Platinum Equity partner, Jacob Kotzubei, praised Vertiv’s progress since the acquisition, suggesting that strong leadership of the company, along with the commitment of its employees around the world, has seen the company performing “exceptionally well”.

He also claimed that the transformation of the business was “right on track”.

 “The sale of ASCO will further support those efforts and help Vertiv continue focusing on its core business,” Kotzubei said. “Given the amount of cash proceeds expected to be generated from the sale, we will evaluate a number of capital structure alternatives that would be beneficial to all stakeholders."

According to Platinum Equity, the sale price of US$1.25 billion reflects a multiple of 11.7 times the adjusted pre-tax earnings (EBITDA) for the 2016 calendar year.

It should be noted, however, that the sale is subject to customary regulatory approvals and is expected to close by Q4 2017.

Platinum Equity said that Vertiv’s sales in the 2016 fiscal year were US$4.4 billion.

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Tags emerson network powerPlatinum Equityvertiv

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