Rockwell Automation Inc,. a Fortune 500 firm that makes technology for industrial companies such as manufacturers, is acquiring software provider Plex Systems Inc. in a $2.2 billion all-cash transaction.

The deal will be financed with a combination of cash on hand and debt, Rockwell Automation disclosed in the acquisition announcement today. Plex Systems is currently owned by private equity firm Francisco Partners.

Milwaukee-based Rockwell Automation sells a variety of industrial hardware products including sensors, motors and specialized computers for managing the equipment in production lines. The company also offers software that helps manufacturers coordinate day-to-day production operations. It posted revenue of about $6.3 billion in the 2020 fiscal year and has more than 20,000 employees worldwide.

Plex Systems is a much smaller company, with less than 600 employees who will be joining Rockwell Automation after the deal completes. It provides a software-as-a-service platform that enables manufacturers to find ways of operating their production lines efficiently.

Manufacturers look for ways to improve efficiency by logging data about their operations, such as how many vehicles were assembled in a given day, and  analyzing this data to find potential issues. If the log shows that one of the production lines in a factory experiences equipment-related outages more often than the rest, technicians can infer that it may be necessary to replace the hardware. It’s this process that Plex Systems helps streamline for customers. 

The process of logging data about factory operations has historically been done manually. Plex Systems’ software collects the data automatically, which saves time for employees while at the same time reducing human error and thus lowering the amount of erroneous information that enters the log.

Plex Systems also provides analytics tools that companies can use to scan the data for insights on how to improve their operations. The company’s platform has visualization features that turn raw industrial information into graphs. If more granular insights are needed, business analysts can run queries on the information using standard SQL syntax. According to Plex Systems, its software lends itself to finding opportunities for improvement in not just production lines but also a manufacturer’s product quality assurance process and supply chain.

Rockwell Automation says that the deal will immediately boost its operation margins upon closing. Additionally, the company said that it expects the transaction to improve the revenue growth of its software business because Plex Systems’ sales are increasing by “double digits.”

“Combining Plex’s cutting-edge cloud technology with Rockwell’s existing software portfolio and domain expertise will add customer value and create more ways to win,” Blake Moret, Rockwell Automation’s chairman and chief executive officer, said in a statement. “The acquisition will also accelerate our software revenue growth and strengthen our annual recurring revenue streams.”

Rockwell Automation expects to complete the acquisition before the end of September. 

Image: Rockwell Automation