TBP Spotlight – Rockwell Automation Invests in PTC

Rockwell Automation
PTC

Rockwell Automation Invests in PTC

Deal Financials

Transaction Value ($m): 1,000
Premium over last closing price: 8.6%
Rockwell EV / LTM Revenue: 3.4x
Rockwell EV / LTM EBITDA: 16.8x
PTC Implied Enterprise Value ($m): 10,904
PTC Implied EV / LTM Revenue: 8.9x
PTC Implied EV / LTM EBITDA: 83.1x

Transaction Overview

  • On June 11, 2018, Rockwell Automation, a factory automation solution provider, made a $1 billion investment in PTC, a product lifecycle management and Internet of Things (IoT) software provider.
  • As part of the transaction, Rockwell and PTC will also establish a strategic partnership that leverages Rockwell’s domain expertise with PTC’s technology to strengthen the Industrial IoT capabilities of each, according to the press release.
  • Despite its 3.4x LTM Revenue multiple, Rockwell invested in PTC at an Implied Enterprise Value of 8.9x LTM Revenue, indicating the company’s commitment to IoT.
  • PTC has been aggressively acquiring IoT-related companies; its past six acquisitions have been IoT-related and totaled $628 million in Enterprise Value, as outlined below.
  • Notably, PTC added machine learning capabilities to its IoT platform by acquiring ColdLight Solutions in May 2015.

Transaction Terms

  • Rockwell will acquire 10.6 million newly issued shares of PTC at $94.50 each, a premium to PTC’s June 8 closing price.
  • Based on PTC’s current outstanding shares pro forma, the investment represents an 8.4% ownership interest in PTC, and will make Rockwell the third largest shareholder of PTC.
  • Rockwell Automation intends to fund the investment with a combination of cash and commercial paper borrowings.

Big M&A Bets in IoT / Big Data Machine Learning / Predictive Analytics

  • As the Internet of Things becomes increasingly important in improving production yield and visibility in the manufacturing process, both technology and industrials companies have begun acquiring software providers in an effort to develop IoT capabilities.
  • In November 2016, GE announced its $915 million acquisition of ServiceMax to strengthen its IoT software platform Predix. ServiceMax provides field service management software built on the Salesforce platform, and received investment from PTC in its $82 million Series F in August 2015.
  • As outlined below, similar acquirers include Siemens and Honeywell. In May 2018 alone, Siemens acquired two IoT software companies, J2 Innovations and Enlightened. Honeywell offers the Honeywell Connected Plant as its Industrial IoT solution, and the company acquired Movilizer in 2016 to strengthen it.

Relevant IoT Transactions

About True Blue Partners, LLC
True Blue Partners is a boutique M&A advisory firm that serves lower mid-market enterprise software, service and solutions companies. It brings the rigorous strategic and financial perspective of bulge bracket firms with a company building approach and a steadfast partnership that only an independent boutique firm can deliver. For more information please visit www.truebluepartners.com or email us at info@truebluepartners.com.

TBP was NOT an advisor to this transaction.