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NEWS RELEASE                                                                                        SEPTEMBER 2016

Decision Guides Help to Increase Market Share

Emerson has signed an agreement to purchase the Valves & Controls business of Pentair for $3.15 billion. The acquisition is expected to close in the next four to six months, subject to various regulatory approvals.

“This acquisition delivers on our strategic plan of investing in Automation Solutions and in markets where we have a global leadership position and see significant long-term growth opportunities,” said Chairman and Chief Executive Officer David N. Farr.  “By adding Pentair’s Valves & Controls leading technologies and services to our already broad portfolio, we have positioned our businesses to grow while continuing to provide our customers around the world with more complete solutions to their toughest challenges.”

“The Pentair Valves & Controls business is a strong fit for us as they share many of the same management principles that have defined success for Emerson over the years such as global customer support, service, best cost sourcing and manufacturing,” said Mike Train, Executive Vice President and Business Leader for Emerson Automation Solutions. “In addition to adding great people and brands to our business, it will allow us to expand our market position and create new opportunities for growth, while also being able to offer our customers the most complete valve solutions portfolio and most extensive service network in the world.”

McIlvaine updates more than 50,000 valve forecasts continually and also provides market share rankings based on the latest 12-month performance. See: N028 Industrial Valves: World Market

Company

Valve and Actuator Sales

$ Millions

General Performance

$ Millions

High Performance

$ Millions

High Performance Market Share

%

Pentair 2,100 600 1,500 4
Emerson 1,980 600 1,360 3
New Emerson 4,080 1,200 1,880 7
Cameron 1,520 200 1,320 3
Flowserve 1,470 400 1,070 2
Other 78,850 47,000 32,870 81
Total 90,000   50,000 40,000 100

The new Emerson will hardly be a player in the general performance valve market with just a 2 percent market share. However, with a 7 percent market share in high performance valves and sales which are twice that of its nearest competitor, it will be exercising its “right to win” position.  This position could be substantially enhanced by the Decision Guide program initiated by McIlvaine.

High performance valves have been defined by McIlvaine to include both severe and critical service. Each needs to be purchased based on lowest total cost of ownership (LTCO) and not on initial price. These high performance valves are important elements in the Automation Solutions cited by Emerson as the target market for the expanded company. 

Automation Solutions requires process knowledge far beyond what is easily acquired and understood. The supplier needs the knowledge to offer the system and the end user needs the knowledge to justify its LTCO. McIlvaine is offering Decision Guides to address this need.  The guides cover all aspects of coal-fired, gas turbine and reciprocating engine operation.  Narrow guides in specific subjects in oil gas such as molecular sieve switching valves and choke valves are also kept current.

This approach is radically different than current practice and can best be explained by an example.  Emerson is pursuing a large multi-plant automation project for a major utility.  The success of the optimization depends on the quick and precise reaction of many valves. The degree of success in the boiler impacts a number of valve related decisions in the back end portion of the upgrade.  The utility has been using the McIlvaine Power Plant Air Quality Decisions Guide (PPAQD).  A series of five webinars including three already conducted and two to be held in early September are helping the utility, consultants and the suppliers maximize the value of the material in PPAQD.  At this point it looks as if the PPAQD will result in an approach which will save over $200 million in capital costs.

There have been discussions with the executives of the utility as to why the Decision Guide would be critical in determining the best options.  There is agreement that the relevant information particularly about total solutions is doubling every few years. Conventional approaches to take advantage of the voluminous data are clearly inadequate. The consultants and the utility personnel both can take advantage of the Decision Guide.

Emerson can take advantage of this new route to market to ensure that end users around the world understand the lowest total cost of ownership benefits. For more information on Decision Guides click on Decision Guides . The upcoming webinars are described at Hot Topic Hour Schedule and Recordings