D.E. Shaw Takes Emerson Electric Stake, Pushes for Split

(Bloomberg) -- Hedge fund D.E. Shaw has built a stake in Emerson Electric Co. and plans to push for a breakup of the automation-equipment maker, according to people familiar with the matter.

The New York-based firm also may push for the company to consider taking on additional debt to fund a buyback of around $7 billion of its shares, said the people, who asked to not be identified because the matter isn’t public.

D.E. Shaw believes the company should split its business into two units: Automation solutions business and commercial and residential solutions business, the people said. The firm also believes there would be buyers for both businesses, they said.

Emerson Electric rose as much as 4% on the news before closing up 3.4% to $66.40 in New York trading, for a market value of $40.8 billion. The shares have fallen about 14% in the past year.

Representatives for D.E. Shaw and Emerson Electric declined to comment.

The automation solutions division offers software and services that help energy, refining, chemicals and other types of companies maximize production and lower costs, according to Emerson Electric’s most recent annual report. The commercial and residential solutions business makes heating and air conditioning products, among other things.

D.E. Shaw has previously pushed for changes at oil and gas company EQT Corp., commodities firm Bunge Ltd., and retailer Lowe’s Cos. Inc.

Based in St. Louis, Emerson Electric designs and manufactures electronic equipment for industrial, commercial and consumer markets around the world.

--With assistance from Thomas Black.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Matthew Monks, Brendan Case

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