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United States securities and exchange commission logo
February 9, 2022
Mark J. Bulanda
President
Emersub CX, Inc.
c/o Emerson Electric Co.
8000 West Florissant Avenue
St. Louis, MO 63136
Re: Emersub CX, Inc.
Registration
Statement on Form S-4
Filed January 11,
2022
File No. 333-262106
Dear Mr. Bulanda:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4
Cover page
1. Disclose that after the
transactions, you will be a controlled company under the Nasdaq
rules and may avail
yourself, in whole or in part as requested by Emerson, of available
"controlled company"
exemptions to the corporate governance listing standards of
Nasdaq.
Q: What is happening in the Transactions?, page 5
2. Clarify that the common
stock of New AspenTech will not be traded on Nasdaq until you
make an application to
list it on Nasdaq and your application is approved.
Mark J. Bulanda
FirstName LastNameMark J. Bulanda
Emersub CX, Inc.
Comapany9,NameEmersub
February 2022 CX, Inc.
February
Page 2 9, 2022 Page 2
FirstName LastName
Q: What will existing stockholders of AspenTech own after the Transactions?,
page 6
3. Revise to state that following the transactions, stockholders of
AspenTech will own shares
in a "controlled company" under Nasdaq. Clarify that certain outcomes
of corporate
actions of New AspenTech will be controlled by Emerson and certain
approval rights will
continue as long as Emerson beneficially owns a certain percentage of
outstanding shares.
Risk Factors
Ownership interests will not be adjusted if there is a change in the value of
AspenTech..., page
34
4. Revise this risk factor to specify that the number of shares AspenTech
shareholders will
receive under the transaction agreement is based on a fixed exchange
ratio. Discuss any
risks related to the fact that the exchange ratio will not be adjusted
to reflect changes in
the market price of AspenTech shares before the closing date and that
the value of the
shares surrendered in the transactions may be higher or lower than the
value of such
shares at an earlier date.
Following the completion of the Transactions, Emerson will be prohibited,
subject to certain
exceptions, from transferring shares..., page 38
5. Expand your risk factor to disclose risks to New AspenTech's stock
price or its ability to
maintain Nasdaq continuing listing requirements after the expiration
of Emerson's
standstill period or the exercise of Emerson's pre-agreed procedures
to acquire shares of
New AspenTech.
Risk Factors Related to the Business of New AspenTech, page 39
6. Please add risk factors related to the anti-takeover and exclusive
forum provisions in New
AspenTech's organizational documents.
Background of the Transactions, page 55
7. When you refer to the AspenTech Board clarify that you mean all
members of the board
unless otherwise specified or, if not, revise accordingly. When you
refer to Emerson,
clarify that you mean its board of directors or, if not, revise
accordingly. In addition,
expand the description of the transaction timeline to:
identify the material synergies that were discussed at certain
points in the timeline
and quantify them as appropriate;
describe the material attributes and size of Company X;
disclose the negotiations regarding the amount of the
termination fee;
describe in greater detail negotiations determining the merger
consideration,
Mark J. Bulanda
FirstName LastNameMark J. Bulanda
Emersub CX, Inc.
Comapany9,NameEmersub
February 2022 CX, Inc.
February
Page 3 9, 2022 Page 3
FirstName LastName
including the exchange ratio of 0.42 common stock for each share
of AspenTech
stock;
disclose any discussions involving continuing employment or
involvement for any
persons affiliated with AspenTech before the merger;
discuss any material details with respect to the existing
commercial alliance between
AspenTech and Emerson that impacted the merger negotiations; and
identify any estimate of the value of the OSI Inc. and GSS
business provided by
Emerson after August 12, 2021.
Recommendation of the AspenTech Board and Its Reasons for the Transactions
Business and Financial Information of Emerson Industrial Software Business,
page 70
8. Summarize the material information and discussions with AspenTech's
management that
the AspenTech Board considered in its evaluation of the Emerson
Industrial Software
Business.
Risks, page 72
9. Provide an estimate of the costs to be incurred in connection with the
transactions. Please
also tell us if the AspenTech Board considered any other conflicts of
interest when
evaluating the negative factors of the transaction proposal, including
the fact that
Centerview separately held discussions with both AspenTech and Emerson
about a
possible transaction before being engaged by Emerson as its financial
advisor in January
2021.
Projected Financial Data, page 75
10. Please tell us why the AspenTech Board and Emerson management had a
reasonable basis
to provide financial projections for 5 years, and, with respect to
unlevered FCF synergy
impact, through 2032. In addition, please revise your description of
projected financial
data to:
describe the material, underlying estimates that were used to
calculate the
projections;
disclose the "base case" and "downside case" scenarios that
were presented at the
AspenTech Board meeting on February 19, 2021;
provide the reason why, at the February 19 meeting, the
AspenTech Board
determined that the upside case of the AspenTech February 19
Projections was the
most likely case;
identify the "certain adjustments" agreed to by Emerson and
Aspen Tech on August
Mark J. Bulanda
Emersub CX, Inc.
February 9, 2022
Page 4
17, 2021, regarding the Emerson Industrial Software Business
Projections; and
explain why the Adjusted Projected Synergies are not reflected
in the AspenTech
Management Projections or the Adjusted Emerson Industrial
Software Business
Projections.
Accounting Treatment, page 88
11. Please provide us with a comprehensive analysis explaining how you
determined that
Emerson Industrial Software Business was the acquirer in this
transaction. Please also
revise your disclosures to explain how you arrived at this conclusion.
Please refer to ASC
805-10-55-10 through 55-15.
U.S. Federal Income Tax Consequences of the Transactions, page 96
12. We note your disclosure on page 71 that the AspenTech Board considered
favorably the
expectation that AspenTech stockholders generally will not recognize
gain or loss for U.S.
federal income tax purposes as a result of the exchange of their
AspenTech common stock
for common stock of Newco in the transactions (to the extent
stockholders have gain in
excess of the amount of cash consideration paid in the transactions).
In light of the
materiality of the stock for stock exchange in the merger not being
taxable to AspenTech
shareholders, a tax opinion supporting the intended tax treatment
appears to be required
by Item 601(b)(8) of Regulation S-K. For guidance, please refer to
Staff Legal Bulletin
19 (October 12, 2011). Further, we also note your disclosure that
AspenTech, Emerson,
Newco, and their respective affiliates each intend to take the
position that the transactions,
taken together, qualify as a transaction described in Section 351 of
the U.S. Internal
Revenue Code of 1986. Advise whether a tax opinion will be provided to
support this
conclusion. Lastly, we note that the Form of Tax Matters Agreement
describes that the
pre-closing restructuring, the Emerson contributions, and the merger
exchange are
intended to qualify for the "Intended Tax Treatment." Please summarize
the material tax
aspects of the pre-closing restructuring and the Emerson contribution
in your disclosure
and advise whether the tax opinion referenced in the Tax Matters
Agreement will be
delivered in connection with the closing of the transactions.
Unaudited Pro Forma Condensed Combined Financial Statements
(4) Pro Forma Adjustments and Assumptions, page 154
13. Please revise your discussion of adjustment (e) to the Condensed
Combined Balance
Sheet to disclose the amortization period used to calculate amortization
expense for
intangibles for the year ended September 30, 2021.
FirstName LastNameMark J. Bulanda
14. We note the disclosure in footnote m. In a supporting schedule, please
show how
Comapany NameEmersub
the Aspen CX,Inc.
Technology, Inc.income statement line-items for the 12
months ended
September
February 30, 2021
9, 2022 Page 4 were calculated.
FirstName LastName
Mark J. Bulanda
FirstName LastNameMark J. Bulanda
Emersub CX, Inc.
Comapany9,NameEmersub
February 2022 CX, Inc.
February
Page 5 9, 2022 Page 5
FirstName LastName
Exclusive Venue, page 170
15. We note that the forum selection provision in your proposed charter
identifies the Court of
Chancery of the State of Delaware as the exclusive forum for certain
litigation, including
any "derivative action," to the extent such court has jurisdiction. As
Section 27 of the
Exchange Act creates exclusive federal jurisdiction over all suits
brought to enforce any
duty or liability created by the Exchange Act or the rules and
regulations thereunder,
please clearly state whether the exclusive forum provision applies to
actions arising under
the Exchange Act.
New AspenTech, page 174
16. Provide the basis for your statement that New AspenTech will have
adjusted EBITDA and
free cash flow margins that are "among the highest in the industry."
Overview of Emerson's OSI Inc. and GSS Businesses, page 176
17. Balance your disclosure of the OSI Inc. and GSS revenue generated on a
combined basis
disclosed here for the most recent fiscal year with the revenues and
net loss for each
period presented in your financial statements.
Intellectual Property, page 178
18. Based on your transaction agreement and plan of merger, it appears
that certain
intellectual property related to Open Systems International and the
Echo Business will not
be transferred as part of the restructuring. We also note your
disclosure on page 178 that
states management views the proprietary intellectual property
portfolio of OSI Inc. and
GSS as important in the aggregate. Please disclose any material
intellectual property that
is not being transferred to New AspenTech as part of the
restructuring. Revise your
description of intellectual property to describe the duration and
effect of all patents,
trademarks, and licenses that are material to the business of OSI Inc.
and GSS that are
being transferred to New AspenTech. Refer to Item 101(c)(1)(iii) of
Regulation S-K.
Internal Control Over Financial Reporting, page 191
19. Please revise to more fully describe the nature of the control
deficiencies identified by
management, particularly with respect to revenue recognition. Please
also revise to
describe the steps, if any, that management has already taken to
address these material
weaknesses.
Consolidated and Combined Financial Statements
(1) Summary of Significant Accounting Policies
Revenue Recognition, page FS-10
20. Please provide us with a detailed analysis explaining how you
determined that your
perpetual software license, hardware and professional services are
highly integrated and
Mark J. Bulanda
Emersub CX, Inc.
February 9, 2022
Page 6
are therefore accounted for as a single performance obligation. Please
refer to ASC 606-
10-25-21. Please also tell us if your OSI perpetual software licenses are
ever sold without
professional services and/or hardware. If so, please tell us the amount
of revenue
generated from those license-only sales for each period presented.
(15) Other Financial Data, page FS-22
21. Please revise to add footnotes to the table on page FS-22 to explain
where depreciation
expense and amortization of capitalized software are recorded in your
Consolidated and
Combined Statements of Earnings (Loss).
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Lisa Etheredge, Senior Staff Accountant, at (202)
551-3424 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Patrick Faller, Staff
Attorney, at (202) 551-4438 or Jeff Kauten, Staff Attorney, at (202) 551-3447
with any other
questions.
Sincerely,
FirstName LastNameMark J. Bulanda
Division of
Corporation Finance
Comapany NameEmersub CX, Inc.
Office of Technology
February 9, 2022 Page 6
cc: Phillip R. Mills
FirstName LastName