Emerson Electric will sell a majority stake in its climate technologies unit to Blackstone in a deal that values it at US$14 billion, the latest revamp by the US industrial firm as it focuses on the booming automation market.

The company said on Monday (Oct 31) it will receive an upfront payment of about US$9.5 billion, which it will use to scoop up more companies, especially in the automation segment.

Emerson’s shares rose about 3.8% before the bell as the company also beat fourth-quarter earnings and revenue.

The company is accelerating its software strategy to capture the increasing shift among businesses to automate their operations as they struggle with a shortage of factory workers.

It sold its unit that makes waste disposal equipment and hot water dispensers to Whirlpool Corp and merged its software units with smaller rival Aspen Technology.

Emerson, which will retain about 45% stake in the climate tech unit, said Blackstone and co-investors Abu Dhabi Investment Authority and GIC, would contribute US$4.4 billion in equity toward the deal, which would be supplemented by US$5.5 billion of debt financing.

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The deal, expected to close in the first half of 2023, is the latest in a flurry of private equity transaction this year as valuations tumble amid a selloff in equities on recession worries.

The Climate Technologies business, which will be structured as a joint venture, generated net sales of US$5 billion in fiscal 2022. The unit includes its Copeland compressor business and products and services across residential and commercial heating and cooling.

“The business is poised for accelerated growth as it leads the way in helping consumers and businesses shift to more energy-efficient heating and cooling products as part of their carbon reduction efforts,” global head of Blackstone Private Equity Joe Baratta said. REUTERS