UPDATE: Eaton To Buy Cooper Industries For $11.8 Billion In Cash And Stock
21 Maggio 2012 - 6:10PM
Dow Jones News
Eaton Corp. (ETN) plans to acquire electrical equipment maker
Cooper Industries PLC (CBE) in an $11.8 billion cash-and-stock deal
that will expand Eaton's power management and electrical products
businesses.
Cooper shareholders would receive $72 a share in cash and stock,
a 29% premium to Friday's closing price. The stock, which has never
traded above the offer price, surged 27% in recent trading to
$70.79.
The deal received the backing of both boards, but the tie-up
faces approval from shareholders of both companies as well as
regulators. Eaton expects the deal to close this fall.
"The combination of these two businesses creates an enterprise
of size and capability," said Eaton Chairman and Chief Executive
Alexander Cutler on conference call Monday. "We've known one
another as companies for many, many years. We're all convinced this
is a very, very powerful combination."
Cutler will led the combined company, which will be known called
Eaton Global Corp. and headquartered in Ireland, where Cooper is
now based.
Based on the companies' 2011 results, the new company would have
sales of $21.5 billion and earnings before taxes and interest of
$3.1 billion. Eaton projects the deal will yield $375 million a
year in cost savings, mostly by 2016, and contribute to Eaton's
earnings starting in 2014.
Cleveland-based Eaton operates a diversified portfolio of
businesses that includes manufacturing components and systems for
the aerospace industry, commercial truck transmissions, hydraulic
components, automotive parts and products, and systems for managing
and distributing electric power. After the deal is completed, 59%
of Eaton's sales will come from its electrical business.
Cooper's two business groups are electrical products, such as
Bussmann-brand circuit breakers and lighting fixtures, and its
power safety and distribution business group, which supplies
components and systems used in power grids and harsh-work
environments.
"There are number of products that really complement each
other," Mr. Cutler said. "The key issue here is complementary, not
overlap. That's why this is so powerful."
The addition of Cooper will give Eaton greater exposure to
utility industry power distribution and the lighting and power-load
management industry. Demand for Cooper's products lately has come
from the energy industry, industrial expansion and energy
efficiency projects. Meanwhile, the slump in commercial and
residential construction in the U.S. and the weakness in European
economies have been a drag on sales.
Earlier this month, Cooper reported a profit of $160.7 million,
or $1 a share, down from $346.1 million, or $2.07 a share, a year
earlier. The year-earlier period included a contribution of $190.3
million from discontinued operations. Excluding special items,
earnings were $1.06 per share, up from 93 cents a year earlier.
Revenue from the quarter grew 9.9% to $1.4 billion
Eaton in April reported a first-quarter profit of $311 million,
or 91 cents a share, compared with a year-earlier profit of $287
million, or 83 cents a share. Sales rose 4.1% to $3.96 billion.
Shares of Eaton were recently trading up 1.5% at $43.09.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
--Mia Lamar contributed to this article.
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