April 20, 2016 / 3:57 PM / in 2 years

Emerson launches sale of Motors and Drives unit - sources

FRANKFURT/LONDON, April 20 (Reuters) - Emerson Electric is launching the sale of its Motors and Drives unit, which could be valued at up to $800 million, as the U.S. group focuses on divisions including heating and air conditioning, according to people with knowledge of the plans.

JPMorgan and Centerview Partners, which are advising Emerson on the sale, are expected to send a first information memorandum on the business to prospective buyers by June. Company officials have been in Asia in the past two weeks to scout out potential suitors, two of the people added.

Sector peers such as Brazil’s WEG, Japan’s Nidec , U.S.-based Regal Beloit and Chinese groups Shanghai Electric, Harbin Electric and Wolong Electric are expected to show interest.

Based in St Louis Missouri, Emerson announced the sale of the division last summer as part of a wider reorganisation that includes spinning off its network power business, in which German peer Siemens has showed interest.

Emerson does not provide specific figures for the Motors and Drives unit, which is part of its industrial automation division with $4 billion in fiscal 2015 sales. Emerson will keep of this division.

People following the deal said the unit has about $1.5 billion in revenues and could be worth as much as $800 million based on forecast 2016 EBITDA of about $100 million and sector multiple between 5 and 8.

The company said last year that it expects the divestments, equivalent to a quarter of its $20 billion in sales, to be mostly complete by September 2016. It also said it may yet decide to keep some assets including the Motors and Drives division.

The division includes French industrial alternator and turbine manufacturer Leroy-Somer, acquired in 1990, as well as UK-based Control Techniques, bought in 1994, which makes drives used in the metals, cranes, mining and printing industries.

“A large part of the asset is France-based, which will deter some bidders as it is always challenging to restructure French companies,” one of the people said.

A takeover by a French buyout group such as Eurazeo , PAI or Wendel is a likely outcome, the person added, and other private equity groups will probably look at the asset too.

Emerson, its advisors and the potential bidders either declined to comment or were not immediately available for comment.

Leroy-Somer was created in Angoulême, France, in 1919, by Marcellin Leroy. It has 29 sites worldwide, among them 16 in France, and employs 7,900 people worldwide. It also makes electric engines for the latest e-Mehari from PSA. (Additional reporting by Lina Saigol, Freya Berry in London and Gille Guillaume in Paris, Taiga Uranaka in Japan, Adam Jourdan in Shanghai; Editing by Ruth Pitchford)

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