Contact: Brenon Daly
When Emerson Electric picked up Avocent for $1.2bn last fall, we noted that the acquisition made a great deal of sense as a way for Emerson to get deeper into the datacenter. We also noted that the systems management business that Emerson was inheriting because of Avocent’s earlier purchase of LANDesk looked ‘increasingly out of place.’
No surprise, then, that Emerson has formally begun a process to sell off the LANDesk unit. What is kind of a surprise, however, is the fact that LANDesk is shaping up as a comparatively pricey divestiture. We’ve heard talk of 2 or even 3 times sales for the $150m business. That could get the price back to roughly the $416m that Avocent originally paid for LANDesk back in 2006.
The reason LANDesk is going for a richer multiple than the conventional 2x sales for a divestiture is that there appears to be a number of interested parties for the business. As my colleague Dennis Callaghan outlines in a new report, LANDesk could appeal to virtualization vendors (notably existing partner VMware), hardware providers (notably existing partner Lenovo) and security firms, which might be looking to match Symantec’s pickup of Altiris. (Incidentally, Big Yellow paid about 3.5x trailing sales in its big systems management buy.)
Additionally, the size and stability of LANDesk is also expected to draw interest from buyout shops. We understand that Greenhill & Co, which advised Emerson on the purchase of Avocent, is also handling the planned unwind of LANDesk. Emerson already classifies LANDesk as a ‘discontinued operation’ and plans to have the divestiture done this year.