Eaton to acquire Cooper Industries
Eaton Corporation and electrical equipment supplier Cooper Industries plc announced they have entered into a definitive agreement under which Eaton will acquire Cooper.
The deal is valued at approximately $11.8 billion. At the close of the transaction, which is expected in the second half of 2012, Eaton and Cooper will be combined under a new company incorporated in Ireland, where Cooper is incorporated. The newly created company, which is expected to be called Eaton Global Corporation Plc or a variation, will be led by Alexander M. Cutler, Eaton’s current chairman and chief executive officer.
“This compelling combination of Eaton’s power distribution and power quality equipment and systems with Cooper’s diversified component brands, global reach and international distribution creates a game changer to serve the electrical industry,” said Cutler. “We’re excited about bringing together two great companies to create shareholder value and continue our global growth. This combination significantly expands our ability to better serve our customers with their demands for critical energy saving technologies as they address the impact of the world’s growing energy needs.”
“We are extremely pleased to become part of Eaton’s global electrical business,” said Kirk Hachigian, chairman and chief executive officer of Cooper. “This combination creates endless opportunities to accelerate growth and serve our global customers through combining technology, distribution, penetrating important vertical industries and entering new emerging markets. The two companies are a perfect fit in every respect.”
The combined company would have had historical 2011 revenues of $21.5 billion and EBITDA of $3.1 billion.
Under the terms of the transaction, Cooper shareholders will receive $39.15 in cash and 0.77479 shares of New Eaton for each Cooper share. Based on the closing price for Eaton common stock on May 18, 2012, Cooper shareholders will receive cash and shares valued at $72.00 per share, representing a premium of 29 percent and a total transaction equity value of approximately $11.8 billion.
Eaton shareholders are expected to own approximately 73 percent of the combined company while legacy Cooper shareholders are expected to own approximately 27 percent. Shares of New Eaton will be registered with the U.S. SEC and are expected to trade on the New York Stock Exchange under the ticker symbol ETN.
Eaton has secured a $6.75 billion fully underwritten bridge financing commitment from Morgan Stanley Bank, N.A., Morgan Stanley Senior Funding, Inc. and Citibank, N.A. to finance the cash portion of the acquisition.
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