Eaton Corp. (ETN) said it entered into a definitive agreement with electrical equipment supplier Cooper Industries Plc (CBE) under which Eaton will acquire Cooper Industries in a transaction that will significantly increase the capabilities and geographic breadth of the combined company's power management portfolio and electrical business.
As per the terms of the transaction agreement, Cooper Industries shareholders will receive $39.15 in cash and 0.77479 shares of New Eaton for each Cooper Industries share. Based on the closing price for Eaton common stock on May 18, 2012, Cooper Industries 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 will receive one share of the new company for each share of Eaton that they own upon closing.
Eaton noted that at the close of the transaction, which is expected in the second half of 2012, both the companies will be combined under a new company incorporated in Ireland, where Cooper Industries is incorporated today. The newly created company, which is expected to be called Eaton Global Corp. Plc or a variant thereof, will be led by Alexander Cutler, Eaton's current chairman and chief executive officer.
The acquisition is expected to be accretive to operating earnings per share by $0.35 in 2014 and by $0.45 in 2015. Excluding the non-cash expense related to the amortization of intangibles arising from purchase accounting, the acquisition is expected to be accretive to operating earnings per share by $0.65 in 2014 and by $0.75 in 2015.
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