June 12, 2018
PTC and Rockwell Automation, Inc. have entered into a definitive agreement for a strategic partnership that has digital technology as a focus. As part of the partnership, Rockwell Automation will make a $1 billion equity investment in PTC, and Rockwell Automation’s chairman and CEO, Blake Moret, will join PTC’s board of directors effective with the closing of the equity transaction.
The partnership leverages both companies’ resources, technologies and industry expertise, and will include technical collaboration across the organizations as well as joint global go-to-market initiatives. In particular, PTC and Rockwell Automation have agreed to align their respective smart factory technologies and combine PTC’s ThingWorx IoT, Kepware industrial connectivity, and Vuforia augmented reality (AR) platforms with Rockwell Automation’s FactoryTalk MES, FactoryTalk Analytics and Industrial Automation platforms.
“Leveraging Rockwell Automation’s industry-leading industrial control and software technology, strong brand, and domain expertise with PTC’s award-winning technology enables industrial enterprises to capitalize on the promise of the Industrial IoT,” says Jim Heppelmann, president and CEO, PTC.
“We believe this strategic partnership will enable us to accelerate growth by building on both companies’ records of innovation to extend the value of the Connected Enterprise and deepen our customer relationships,” Blake Moret, chairman and CEO, Rockwell Automation, says. “Together, we will offer the most comprehensive and flexible IoT offering in the industrial space”
Rockwell Automation’s solutions business will be a preferred delivery and implementation provider, supported by an ecosystem of partners that both companies have established.
TermsUnder the terms of the agreement relating to the equity investment, Rockwell Automation will make a $1 billion equity investment in PTC by acquiring 10,582,010 newly issued shares at a price of $94.50, representing an approximate 8.4% ownership interest in PTC based on PTC’s current outstanding shares pro forma for the share issuance to Rockwell Automation. Rockwell Automation intends to fund the investment through a combination of cash on hand and commercial paper borrowings. Rockwell Automation will account for its ownership interest in PTC as an Available for Sale security, reported at fair value.
Share RepurchasesPTC intends to use the proceeds from the equity investment to repurchase stock to offset dilution.
Rockwell Automation is increasing its share repurchase target for fiscal year 2018 to $1.5 billion. This represents a $300 million increase to its previous plans to repurchase $1.2 billion of its stock in fiscal year 2018.
The investment transaction is subject to customary closing conditions and regulatory approvals, and is expected to close within 60 days.
Morgan Stanley & Co. LLC is serving as financial advisor and Goodwin Procter LLP is legal advisor to PTC.
Goldman Sachs & Co. LLC is serving as financial advisor and Foley & Lardner LLP is legal advisor to Rockwell Automation.
Sources: Press materials received from the company.
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