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Eaton to Acquire Cooper Industries, Form Global Power Management Co.

Diversified industrial manufacturer Eaton will acquire electrical equipment supplier Cooper. The combined company would have had historical 2011 revenues of $21.5 billion and EBITDA of $3.1 billion.

Diversified industrial manufacturer Eaton Corp. (www.eaton.com) and electrical equipment supplier Cooper Industries plc (www.cooperindustries.com)  entered into a definitive agreement in May under which Eaton will acquire Cooper "in a transaction that will significantly increase the capabilities and geographic breadth of the combined company's power management portfolio and electrical business," according to an Eaton spokesman.

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 today. The newly created company, which is expected to be called Eaton Global Corporation Plc or a variant thereof ("New Eaton"), will be led by Alexander M. Cutler, Eaton's current chairman and chief executive officer.

Antoine Gara, a writer with The Street (www.thestreet.com) said "the $11.8 billion deal [makes] the industrial merger the largest U.S. acquisition of 2012, and bolstering expectations for additional M&A in the sector. The merger also strengthens a revival in M&A among diversified engineering conglomerates. A near $4 billion acquisition of Thomas & Betts by European giant ABB in January signaled that after a post-crisis focus on bolstering capital, bets on a cyclical upturn in industrial spending could spark more deals. In fact, M&A appetite could generate competing bids for Cooper Industries, and lead to other deals within the sector."

Founded in 1833, Cooper is a leading supplier of electrical equipment with a wide range of electrical products including electrical protection, power transmission and distribution, lighting and wiring components. This suite of electrical products enhances customer energy efficiency and safety across a number of end markets globally.

Founded in 1911, Eaton is a global power management company providing power distribution, power quality, control and automation, power monitoring, and energy management products and services. Eaton encompasses electrical, aerospace, hydraulics and vehicle businesses.

"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. 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.

 

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