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Emerson’s acquisition of Pentair’s valve business gets conditional federal approval

The Apex Building, headquarters of the Federal Trade Commission, on Constitution Avenue and 7th Streets in Washington, D.C..
The Apex Building, headquarters of the Federal Trade Commission, on Constitution Avenue and 7th Streets in Washington, D.C..

The US Federal Trade Commission (FTC) has approved Emerson Electric Company’s acquisition of the Switzerland based valves and controls arm of British industrial valve manufacturer Pentair. Conditions have been placed on the deal however, to avoid violations of federal antitrust laws.

Both Emerson and Pentair manufacture industrial valves and control products, including switchboxes, which are commonly used in the chemical, oil and gas, petrochemical and power industries.

The FTC charges that the proposed $3.15 billion (€2.9 billion) acquisition would merge the leading switchbox manufacturers in the US, which combined control around 60% of the market. Therefore, as a key condition of the deal, Emerson has to sell Pentair’s switchbox business to Stamford, Connecticut’s Crane Company. The terms of the consent agreement state that ten days after securing the acquisition of Pentair, Emerson must divest Westlock Controls Corp, the subsidiary of Pentair which designs, manufactures and sells switchboxes to Crane.

Emerson is required to provide Crane all of Westlock’s production facilities, intellectual property and confidential business information, as well as the option to hire Westlock employees.

The FTC imposed the condition on the deal out of concerns over competition in the switchbox market. “Switchboxes perform a critical safety function, so brand reputation and product reliability are very important to customers. Emerson’s TopWorx and Pentair’s Westlock switchboxes are the most widely-used brands nationwide and, for many customers, the only acceptable brands of switchboxes” The FTC said in a statement.

“Because of the time and investment required to develop switchboxes along with the time required to build a sufficient reputation with customers for quality and reliability, current and future competitors in the switchbox market are unlikely to restore the loss of competition caused by the acquisition, the complaint alleges.

Based in Schaffhausen, Switzerland, Pentair Valves and Controls generates annual revenue of $1.84 billion and employs close to 7,500 people across the globe.

The Apex Building, headquarters of the Federal Trade Commission, on Constitution Avenue and 7th Streets in Washington, D.C..