Diversified industrial manufacturer Eaton Corporation has just announced plans for two electrical acquisitions, one in Europe and one in Asia Pacific:
These will significantly increase the capabilities, size, and geographic breadth of
Eaton's electrical business. The acquisitions' combined estimated sales for the year ending December 31, 2007 are approximately $2.0bn.
The European acquisition is of The Moeller Group, a leading supplier of components for commercial and residential building applications, and industrial controls for industrial equipment applications. The company sells products primarily to customers in Western and Eastern Europe and in Asia Pacific. The agreed purchase price is €1.55bn (US $2.23bn). The transaction, expected to close in the first quarter of 2008, is subject to regulatory approvals and other customary closing conditions.
Based in Bonn, Germany, The Moeller Group has estimated sales of €1.02bn (US $1.47bn) and EBITDA of €170m (US $245m) for the 12 months ending December 31, 2007. The company has 15 global production facilities, sales offices in more than 90 countries, and approximately 8,700 employees.
Eaton also announced a tender offer today for all the shares of Phoenixtec Power Company Ltd., a company listed on the Taiwan Stock Exchange, which will be launched on December 21. Phoenixtec manufactures single- and three-phase uninterruptible power supply (UPS) systems that are sold globally. Phoenixtec has leading positions in UPS markets particularly in China, Southeast Asia, and Eastern Europe. Eaton's offer price is NT $50 / share (US $1.54 / share). Assuming 100 percent of Phoenixtec outstanding shares are purchased, the net purchase price would be US $565m.
"These two transactions further establish Eaton as a leading global supplier of electrical power distribution and control products as well as power quality equipment and systems," said Alexander M. Cutler, Eaton chairman and chief executive officer. "Once these acquisitions close, our Electrical business will have annual revenues in excess of $7.5bn. Further, Eaton's mix of international revenues, based on final destination of our products, will be between 55 to 60%.
"Today's actions clearly underscore Eaton's success in expanding our Electrical business globally," said Cutler. "The Moeller Group's broad portfolio of power distribution and control products that meet International Electrotechnical Commission (IEC) standards, along with its strong distribution network in both Western and Eastern Europe and its large-scale production facilities in several Eastern European countries, will significantly expand our competitiveness in electrical markets outside the US.
"We are equally excited about the acquisition of Phoenixtec," said Cutler. "The company's leadership position in the China and Taiwan power quality markets provides us a strong foundation to sell our entire range of power quality products. In addition, the company's engineering capabilities and its manufacturing facilities in Taiwan and China provide us the products, technical knowledge, and competitive manufacturing footprint to greatly expand our global power quality business."
Cutler added: "We expect these acquisitions to be neutral to our operating earnings per share in 2008, and accretive by $.25 to $.35 / share in 2009. Our outlook in 2008 for Eaton overall, inclusive of these acquisitions, is for revenues to grow 25% and operating earnings / share to grow between 15 to 20%.
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