Furthering the convergence of IT and facilities in the data center, manufacturer of power and cooling solutions and other data center infrastructure equipment Emerson Network Power announced a plan to acquire Huntsville, Ala.-based KVM switch manufacturer Avocent.

“This is a strategic marquee acquisition for us within the network power space,” Emerson CEO David Farr said in a conference call. “It’s one that we have been working on for quite some time. Their products are integral part of communication within the data center, which allows us to tie all our capabilities together and then communicate up to the main systems.”

Avocent board of directors unanimously voted to accept Emerson’s tender offer to buy the company at $25 per share, or a total of about $1.2 billion. Emerson expects to close the purchase around January of 2010. The deal is subject to regulatory approval and approval by Avocent majority stockholders.

The buyer plans to integrate Avocent within the next 9-12 months with its Liebert business.

Once the acquisition is closed, Emerson plans to combine Avocent solutions with its products to allow for holistic monitoring and control of the entire data center infrastructure. The company plans to connect UPS systems, precision cooling, power strips and back-up power equipment to the KVM switch, which now enables IT administrators to monitor and control IT devices remotely.

Farr expected solutions that result from the acquisition to also help the company gain market share in its core business of providing legacy UPS and cooling systems. Emerson is second after APC by Schneider Electric in the space.

Emerson Network Power made $2.6 billion in sales to data centers in 2008. Avocent’s sales that year were $657 million in what Farr said was a $1 billion market place. He expects the acquisition to expand the market Emerson serves “by at least $2-3 billion” over the next 5-10 years.

“This is a game about expanding the market more than trying to … aggressively change the market share or the cost structure,” Farr said.

Avocent leads the KVM switch market in all major markets around the world, according to Emerson. The company controls more than 40 percent of the market in Europe and the Americas and more than half of the Asian market. Emerson’s biggest competitors in Europe and the Americas are Raritan and Belkin, with Raritan being its biggest rival in Asia.

Ability to provide KVM switches will add to Emerson’s product footprint within the rack, already comprised of the racks themselves, power strips, UPS systems, drawers and precision cooling solutions. “The technology we’re going to develop here and the software capabilities … will allow us to communicate (within) that rack and also outside that rack.”

Emerson’s pursuit of acquisitions is not going to end with Avocent.

“We’re still in the acquisition hunt,” Farr said. “We’ve got a balance sheet that can deal with this and we generate a lot of cash flow. This is not the end of the game for us. You’re going to see us continue to do acquisition.”

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