A Letter to the Board of Emerson
Dear Members of the Board:
We are writing to you on behalf of certain investment funds advised by D. E. Shaw & Co., L.P., (collectively the “D. E. Shaw group”). The D. E. Shaw group is a global investment and technology development firm with over $50 billion in assets under management and a track record of working with companies to create long-term, fundamental value. We have been shareholders of Emerson Electric Co. (the “Company”, “Emerson Electric” or “Emerson”) (NYSE: EMR) for over four years and today hold a more than 1.0% interest in the common stock and equivalents of the Company.
Emerson is an iconic company with world-class assets. However, persistent undermanagement of those assets and a long track record of poor capital allocation, excessive costs, suboptimal business configuration, deficient corporate governance, and misalignment of interests have led to significant underperformance of Emerson stock relative to its peers and to the broader market over every relevant measurement period. Simply put, we believe that Emerson has the assets and businesses to be a great company with a premium valuation, but the management team and Board have let shareholders down.
To create maximum and enduring value for its shareholders, Emerson needs to change. We believe the right set of actions could result in over 50% upside to Emerson’s share price, or over $20 billion of equity value creation for Emerson shareholders, while at the same time preserving Emerson’s market leading position in its various businesses. We have outlined our perspectives in this letter and in the attached slide deck, which we are making available to our fellow shareholders, today.