Emerson Electric Is Buying Fisher Controls

Monsanto Co. will sell its Fisher Controls International unit to Emerson Electric Co. for $1.275 billion, the companies said Tuesday.

The sale reflects a strategy by Monsanto, a leading chemical and agricultural product company, to shed businesses that don’t fit with its core operations. For Emerson, the acquisition could strengthen an area where the company already is doing well, valves and process controls.

Fisher Controls, based in St. Louis, is a leading worldwide supplier of control valves and control systems for oil and gas, chemical and pulp and paper industries. It has about 7,000 employees and annual sales of $928 million.

Emerson makes a broad range of electronic, electrical and other products for consumer, commercial and industrial markets. Fiscal 1991 sales were $7.4 billion.

Monsanto makes and markets high-value chemical and agricultural products, pharmaceuticals and low-calorie sweeteners. Sales in 1991 were $8.9 billion.

Wall Street investors reacted by bidding up the price of Monsanto, seeing the sale as positive for that company’s long-term health. Monsanto stock surged $3.25 a share to $56.75 in heavy trading on the New York Stock Exchange.

At the same time, Emerson shares dropped $1.125 to $50, reflecting anxiety about how the acquisition could affect the company’s financial strength.

Standard & Poor’s Corp., a leading debt-rating agency, placed Emerson’s senior debt on “credit watch with negative implications,” meaning that S&P; might downgrade the company’s high rating. That would make it more expensive for Emerson to borrow money.

“While the acquisition will further strengthen Emerson’s position as a leading worldwide manufacturer of process controls, the firm would also be left with a weakened financial profile,” S&P; said.

The announcement coincided with the release of Emerson’s third-quarter earnings, which rose 5.6% to a record $174.5 million, or 78 cents a share. Earnings last year were $165.3 million, or 74 cents a share.

Sales for the three months ended June 30 were $1.97 billion, up from $1.85 billion last year.

Chairman Charles F. Knight said the earnings reflected improved sales in each of its businesses.

“Strong sales gains in the quarter continued to be achieved by the heating, ventilating and air conditioning business and fractional motor business as residential construction markets continued to show improvement,” Knight said.

For the first nine months, Emerson reported earnings of $495 million, or $2.21 a share, on sales of $5.7 billion.