Emerson Electric (TG:EMR)
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Diversified industrial equipment maker Emerson Electric Co. (EMR) will acquire information-technology company Avocent Corp. (AVCT) for about $1.2 billion in cash, broadening the software offerings of Emerson's energy efficiency-related businesses.

Emerson plans to apply Avocent's software management technology to its network power systems, energy management and precision cooling services.

"Clearly, this adds a little bit more power to Emerson's network power systems" business, said Daniel Holland, an analyst for Morningstar Inc. "Having a pretty broad portfolio offering helps get a customer more interested."

Avocent shareholders will get $25 a share, a 22% premium to Monday's close. The deal, which was unanimously recommended by the Avocent board, is expected to be completed around year-end if it gets approval from regulators and a majority of Avocent shareholders. The stock was last at $25 in August 2008.

In Tuesday trading, Avocent shares were up 21% at $24.83 a share.

The Huntsville, Ala., company blends server hardware, software and embedded technologies into one system that data-center operators use to monitor, manage and fix problems with their operations. The company has been trying to boost sales of software that aren't tied to the company's computer servers. About 30% of the Avocent's $647 million of revenue last year was derived from software.

Demand for servers has fallen sharply in recent quarters as companies cut back on capital spending. Sales in Avocent's management systems segment, which includes its hardware lines, declined 28% in the second quarter.

For the first six months of 2009, Avocent lost $63.2 million, or $1.42 a share, as sales slipped 15% from a year earlier to $254.7 million.

Emerson shares were recently trading up 3.3% at $39.97 a share The stock is up 9% so far this year as the company has reported lower earnings the past three quarters amid falling demand.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

(Joan E. Solsman contributed to this report)