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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