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BREAKING NEWS FROM CNBC’S DAVID FABER: ROCKWELL AUTOMATION REBUFFS OFFERS FROM EMERSON ELECTRIC - SOURCES

WHEN: TODAY, TUESDAY, October 31, 2017

WHERE: CNBC'S "SQUAWK ON THE STREET"

Following is the unofficial transcript of BREAKING NEWS from CNBC's David Faber today on CNBC's "Squawk on The Street" (M-F 9AM – 11AM.)

All references must be sourced to CNBC.

CARL QUINTANILLA: AND 126 MILLION AND COUNTING. FACEBOOK, GOOGLE, AND TWITTER ON THE HILL AS NEW DATA SHOWS THE SCOPE OF RUSSIAN BACKED PREELECTION MANIPULATION, FAR GREATER THAN PREVIOUSLY DISCLOSED BUT FIRST DAVID'S GOT SOME NEWS ON A BIG DEAL IN THE INDUSTRIAL HEARTLAND.

JIM CRAMER: WHAT?

DAVID FABER: YES, WE DO. EMERSON ELECTRIC WANTS TO OWN ROCKWELL AUTOMATION. AND OVER THE LAST THREE MONTHS, HAS MADE A SERIES OF OFFERS TO THE COMPANY IN AN ATTEMPT TO FULFILL THAT DESIRE, ACCORDING TO PEOPLE FAMILIAR WITH THE SITUATION. EMERSON'S MOST RECENT OFFER FOR ROCKWELL WAS WORTH MORE THAN $27 BILLION. IT WAS MADE IN EARLY OCTOBER FOR 215 DOLLARS A SHARE. THAT WAS SPLIT EVENLY BETWEEN CASH AND STOCK, LIKE THE OFFER WORTH $200 THAT IT MADE IN EARLY AUGUST AND ONE IT MADE A FEW WEEKS AFTER THAT, EMERSON'S LATEST OFFER TO BUY ROCKWELL, WHICH HAS INCREASED IN VALUE GIVEN THE MOVE UP IN EMERSON'S STOCK PRICE, WAS MET WITH A TERSE-REJECTION, ACCORDING TO PEOPLE WITH KNOWLEDGE OF THAT CORRESPONDENCE. AN EMERSON OFFICIAL CONFIRMED THE COMPANY MADE RECENT OFFERS TO PURCHASE ROCKWELL AUTOMATION BUT WOULD OFFER NO COMMENT BEYOND THAT. ROCKWELL, A FIERCELY INDEPENDENT MIDWESTERN COMPANY WITH A RELATIVELY NEW CEO HAS BEEN NO STRANGER TO EMERSON AS THAT COMPANY LOOKED FOR OPPORTUNITIES TO CONSOLIDATE IN THE INDUSTRIAL AUTOMATION SECTOR. BUT AFTER YEARS OF TRYING TO ENGAGE WITH ROCKWELL, EMERSON FOR THE FIRST TIME MADE A FORMAL OFFER TO BUY ROCKWELL IN AUGUST. NOW THAT OFFER WAS FOR $200 AND WHEN MET WITH REJECTION, EMERSON CAME BACK WITH BOTH A HIGHER PRICE AND WITH CONCESSIONS ON SOCIAL ISSUES THAT IT HOPED WOULD BRING ROCKWELL TO THE NEGOTIATING TABLE. THUS FAR, THAT EFFORT, WHICH I AM TOLD INCLUDED A WILLINGNESS TO RENAME THE EMERSON ROCKWELL HAS BEEN MET WITH CONTINUED REJECTION. AS WELL IN THE TIME SINCE EMERSON MADE THE FIRST OFFER, ROCKWELL STOCK PRICES MOVED UP BY MORE THAN 13%. NOW THE LATEST OFFER FOR $215 IN CASH AND STOCK AS I SAID EVENLY SPLIT WOULD VALUE ROCKWELL A LITTLE MORE THAN 20 TIMES IT'S EXPECTED EBITDA FOR 2017. IT WOULD BE ROUGHLY 32 TIMES THE ANALYSTS EARNINGS PER SHARE ESTIMATES FOR THIS YEAR, AND IT WOULD HAVE A TOTAL VALUE OF MORE THAN $27 BILLION, ROUGHLY $27.6 BILLION AT LEAST ON THE SHARE COUNT I HAVE FOR ROCKWELL. EMERSON'S OFFER STEMS FROM ITS DESIRE TO BE A LEADER IN ALL AREAS OF AUTOMATION AND TO PRESENT A STRONGER COMPETITIVE OFFERING TO INDUSTRIAL COMPANIES AS EUROPEAN GIANTS SUCH AS SIEMENS, ABB, AND SCHNEIDER BECOME MORE AGGRESSIVE IN THE FIELD. EMERSON BELIEVES THE COMBINATION COULD BRING REVENUE AND COST SYNERGIES THAT WOULD BE WORTH AS MUCH AS $6 BILLION. NOW IT'S UNCLEAR WHETHER EMERSON IS WILLING TO MOUNT A FULL-ON HOSTILE BID FOR ROCKWELL, WHICH IS INCORPORATED IN DELAWARE. BUT GUYS, CERTAINLY INTERESTING TO SEE SO FAR REBUFFED, NOW BEEN MADE PUBLIC. WE'LL SEE WHAT SHAREHOLDERS THINKS ROCKWELL SHARES OF COURSE, AS WE WOULD EXPECT, TRADING UP RIGHT AROUND 200 BUCKS A SHARE. AND THAT IS WELL ABOVE A NUMBER OF THE TARGETS.

For more information contact:

Jennifer Dauble
CNBC
t: 201.735.4721
m: 201.615.2787
e: jennifer.dauble@nbcuni.com

Emma Martin
CNBC
t: 201.735.4713
e: emma.martin@nbcuni.com

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