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Company: Aspen technology (AZPN)
Business: Aspen technology offers industrial software that focuses on helping customers in assistant industries worldwide. His software is used in performance engineering, modeling and design, supply chain management, predictive and prescriptive warting, digital grid management and industrial data management. The company serves a number of wealth -intensive industries, including oil and gas research and production. Oil and gas processing and distribution; as well as oil and gas refinement and marketing.
Market value: USD 16.8 billion ($ 265.25 per share)
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Aspen Technology shares last year
Activist: Elliott Investment Management
Property: ~ 9.0%
Average costs: n/a
Activist comment: Elliott is a very successful and clever activist investor. The company of the company includes analysts of leading technical equity companies, engineers, company partners -former technology CEO and COOS. When evaluating an investment, the company also hires special and general management consultants, expert cost analysts and industry specialists. Elliott often observes companies for many years before investing and has an extensive stable of impressive board candidates. The company has historically focused on strategic activism in the technology sector and was very successful with this strategy. However, their activism group has grown in recent years, and Elliott has carried out much more governance -oriented activism and creates value from a much larger width of companies.
What happens
On February 7, Elliott announced that it has taken a position of 1.5 billion US dollars in Aspen technology. The company expressed its disagreement with the decision of Aspen to support an offer of $ 265 per share of Emerson Electric, and found that the company essentially underestimated it.
Behind the scenes
ASPEN Technology (AZPN) is a global provider of software solutions for process optimization with which the system and process design, operating performance and planning of the supply chain are to be managed and optimized. On November 5, 2024, Emerson Electric (EMR), which currently has around 57.4% of the outstanding stocks of Aspen, published a takeover offer to acquire all outstanding shares of Aspen, which Emerson did not already belong to $ 265 per share. In order to evaluate this offer, the board of Aspen formed a special committee of three independent and uninterested directors. Ultimately, on January 27, 2025, it was announced that the committee unanimously voted to recommend the transaction for approval. On February 7, Elliott announced that it is opposed to the takeover offer, since the company does not believe that the company estimates it fairly.
Emerson acquired a position of 55% in Aspen in 2022 and from May 2024 prevent a standstill contract to acquire additional shares (it received 57% from the company from shares in stock). As an insider for 2.5 years, Emerson Aspen has known well and could have made this offer since May. As a controlling shareholder, Emerson has an information advantage over the public and it is now proposed that it strategically defines its step in time. Notably, It Comes After A Good Quarter Where The Integration of Emerson's Contributed Assets from Its 2022 Majority Investment is Starting to Take Hold, An Improvement of Margins Seems to Be on The Horizon, Particularly With The Recent Suspension of Aspen's Business, And The Seating Of The Trump Administration (emerson actually announced its bid on election day) Bringing with it a more lenient regulatory environment for oil and chemical-related products.
When Emerson publicly announced his offer, the Aspen share acted at approx. 240 USD per share and made this takeover premium of 10%, which does not close to the important synergies that Emerson could get from this transaction. While there are operational and sales syngies of at least $ 100 per share, what Emerson is most valuable for Emerson is access to Aspens Software and Code, which Emerson can only receive through the acquisition of the entire company. There is a clear precedent for this. In January 2023 Schneider Electric excluded his acquisition from Aveva and bought the remaining 40% of the company – which is by chance the smaller peer player from Aspen. Aveva's undisturbed share price offered a bonus of 41%before Schneider's interest was disclosed in August 2022. This is more of a standard bonus for these types of transactions and is in line with the $ 100 per share of synergies that Emerson would receive here. This indicates a much higher fair price than $ 265 per share. If Emerson looks at all synergies and integration advantages in this transaction, a more reasonable price north of USD 350 per share seems to be.
As a majority shareholder, Emerson has a lot of control in this situation. Without an activist investor, this deal will probably be completed at 265 US dollars. The price not only appears to be low, but the process indicates a treasure business. For example, APEN's “Independent Special Committee”, which approved this deal, consisted of three directors, two of whom were reported on the board. Therefore, Emerson effectively controlled the special committee, which was commissioned to check the review offer. Fortunately, in Delaware, where the company is entered, for an offer of at least 50% of the non -prisoners outstanding shareholders requires to approve the transaction. This means that 21.4% of the remaining shareholders (except Emerson) have to vote for the conclusion of the contract. Elliott has 9%, and if every other shareholder (an unlikely probability) is correct, Elliott would only need another 12.4% to block the transaction. If 5% of the shareholders do not vote, Elliott would only need another 7.4% of the votes. Kayne Anderson is the next largest shareholder with 6.5%, so his voice will be important. It should be noted that it is not clear whether Elliott's position is in ordinary shares or swaps (a common practice for the company), since the actions here would not request that the company would submit a 13d. In this situation, however, it is not so relevant. If the company were obliged to vote for 50% of uninterested shareholders, Elliott would have to have his position in regular shares. In this case, however, the requirement of 50% of uninterested shares is, even if Elliott has swaps (and the assumption that the counterparty does not enter into a risk of equity), the shares underlying the swaps are not displayed.
One last note – this is not just a “Bumpitrage” station for Elliott. While the company Emerson would sell at a fair price, it has the stock because it likes Aspen and believes that it is a good investment as an independent company that owned 57% of Emerson. If Emerson does not increase its offer, this does not mean that Elliott specifies the price of USD 265 or another price that it is not enough. The company would probably be happy to own the stock and to benefit from the same operational and macro -supporting descents that Emerson sees. In addition, the company had a strong call for profit, but the share did not get over the 265 US dollars in the news because the offer price sets an artificial upper limit. So this is a situation in which Emerson increases its offer, the stock increases. If the offer disappears, the artificial blanket and the share price could also increase in this situation.
Ken Squire is the founder and president of 13D monitor, an institutional research service for shareholder activism, and the founder and portfolio manager of the 13D activist fund, an investment fund that invests in a portfolio of activists 13D investments.