Rockwell Automation is investing $1 billion in PTC, as the two companies team up to advance their vision of software-driven factories and industrial operations.
The companies said Monday they expect their “strategic partnership” to boost both businesses by strengthening their pitch to customers around the world who are interested in enhancing their physical operations with digital technologies.
The news sent PTC’s stock (NASDAQ: [[ticker:PTC]]) to a record high for the company, according to Yahoo Finance data. As of this writing, it was trading at nearly $92 per share, up more than 5 percent from Friday’s closing price. PTC is currently valued at nearly $10.6 billion.
Rockwell’s stock (NYSE: [[ticker:ROK]]) was relatively unchanged after the announcement. It was trading around $179 per share Monday afternoon, up less than 1 percent from Friday’s closing price. The Milwaukee-based company reportedly rebuffed multiple takeover offers made by Emerson Electric (NYSE: [[ticker:EMR]]) last year, including one that valued Rockwell at more than $27 billion. The company is currently valued at $22.5 billion.
Founded in 1985, Needham, MA-based PTC is most widely known for selling computer-aided design software, which helps enterprise customers like Caterpillar (NYSE: [[ticker:CAT]]) develop and refine their products.
In recent years, PTC has also tried to position itself as an Internet of Things (IoT) and augmented reality (AR) technology company. Since late 2013, it has spent more than half a billion dollars to acquire companies that help develop software to connect devices (ThingWorx, Axeda, and Kepware), help manage the flow of data from connected devices (ColdLight), and enable AR applications (Vuforia, acquired from San Diego-based Qualcomm).
Rockwell, which traces its roots back to the early 1900s, has also been pushing into connected device technologies for industrial settings—the company dubs its IoT vision the “connected enterprise.” Rockwell makes sensors, controls, and other physical products to help manufacturers automate operations, as well as software to help run equipment, troubleshoot problems, and analyze data. Its digital initiatives in recent years include the acquisition of vMonitor, a Middle Eastern company that made software-enabled monitoring products for the oil and gas industry; a $3 million investment in Bedford, MA-based SmartCloud; the launch of a mobile app for monitoring and troubleshooting factory equipment; and a partnership with Microsoft (NASDAQ: [[ticker:MSFT]]) and Cambridge, MA-based Nubisa focused on developing mobile toolkits for industrial workers.
Other industrial stalwarts have also been investing in IoT initiatives, including Honeywell (NYSE: [[ticker:HON]]), Siemens, and General Electric (NYSE: [[ticker:GE]]). But GE has reportedly been scaling back its digital investments in recent months, as new CEO John Flannery sharpens the giant corporation’s focus and attempts to bring up its struggling stock price.
Rockwell and PTC see their products and services as complementary. Their partnership will include joint sales and marketing initiatives around the world, as well as technical collaboration, according to a press release. Ultimately, they’re hoping to help customers boost productivity, reduce operational inefficiencies and risks, and more tightly integrate their various technologies and systems.
“Together, we will offer the most comprehensive and flexible IoT offering in the industrial space,” said Rockwell CEO Blake Moret in a prepared statement. “Our equity investment in PTC reflects our confidence in the partnership and the significant upside we expect it to create for both companies as we work together to profitably grow subscription revenue.”
Rockwell said its investment in PTC will give it an approximately 8.4 percent stake in the company, and Moret will join PTC’s board. Rockwell is purchasing almost 10.6 million newly issued shares at a price of $94.50 apiece, an 8.6 percent premium to PTC’s closing stock price on Friday. PTC said it will use the cash infusion to repurchase stock to offset dilution.
Rockwell’s $1 billion investment is expected to close within 60 days, according to the press release.
