Elliott Investment Management has taken a 9% stake in Aspen Technology (NASDAQ: AZPN) and is opposing a $265 per share tender offer from Emerson Electric (NYSE: EMR), stating that the price undervalues the company. Elliott’s $1.5 billion investment signals a battle over Aspen’s future as Emerson, which already owns 57.4% of Aspen, attempts to acquire full control.
Activist Pressure Against Emerson’s Tender Offer
On February 7, Elliott made a public announcement contesting the bid, emphasizing that Aspen Technology is worth significantly more than the proposed price. The activist investor argues that the deal lacks a proper takeover premium, considering Aspen’s growing margins, software synergy potential, and improving market conditions.
Emerson initially acquired a majority stake in Aspen in 2022 and was restricted from increasing its position until May 2024. Elliott contends that Emerson strategically timed the offer following a strong quarter and favorable market trends. The investment firm estimates that a fair valuation exceeds $350 per share, factoring in potential software and operational synergies.
Concerns Over Deal Structure
Elliott also questioned the independence of Aspen’s special committee, which recommended accepting Emerson’s offer. With two out of three directors on the committee aligned with Emerson, the firm argues that the process may not have been entirely impartial. While Emerson holds a majority stake, regulatory requirements dictate that 50% of the disinterested shareholders must tender their shares for the deal to proceed.
Potential for Shareholder Resistance
Given Elliott’s 9% stake, opposing shareholders only need an additional 12.4% to block the deal. With another major investor, Kayne Anderson, holding a 6.5% position, the opposition could gain traction if more investors join the resistance.
Elliott’s strategy suggests that this is not a short-term arbitrage play but rather a belief in Aspen’s standalone value. If Emerson refuses to raise its bid, Elliott may retain its stake, believing that Aspen’s strong fundamentals will position the stock for organic growth.
Market Impact and Future Outlook
Aspen’s stock has remained around the $265 offer price, effectively acting as a ceiling despite recent strong earnings. If Emerson improves its bid, shares will likely move higher. Conversely, a failed takeover could remove the artificial cap, allowing Aspen’s stock to rise on its own merits.
With Elliott’s history in activist investing and strategic tech plays, this battle highlights ongoing trends in shareholder activism, particularly in the software and industrial automation sectors. Investors should closely watch whether Emerson raises its bid or if shareholder opposition forces a different outcome.
