Denmark-based heating and cooling solutions provider Danfoss and power management company Eaton announced Tuesday that Danfoss will acquire Eaton’s Hydraulics business for $3.3 billion in cash.
Eaton’s Hydraulics business accounted for 86 percent of the company’s total hydraulics segment revenue in 2019. The segment is a global provider of hydraulics components, systems and services for industrial and mobile equipment. Eaton Hydraulics had total 2019 sales of $2.2 billion and employs approximately 11,000 people.
Subject to closing conditions and regulatory approvals, the deal is expected to close by the end of 2020.
Dublin, Ireland-based Eaton is retaining its Filtration and Golf Grip businesses that are currently reported in the company’s Hydraulics segment.
“Today, we take a significant and transformational step in creating a global leader in mobile and industrial hydraulics,” said Kim Fausing, Danfoss president and CEO. “It is a once-in-a-lifetime opportunity to combine our largely complementary portfolios and geographic footprints. Eaton Hydraulics is a highly respected player in the global industry, recognized for its dedicated people and strong brands. By combining the knowledge and experience of the two businesses, our customers will benefit from unmatched expertise from a single partner. With this agreement, we continue to invest in our core hydraulics business and digital solutions to stay a strong technology partner.”
“Today’s announcement is part of the ongoing transformation of Eaton into a higher growth company with better earnings consistency,” said Craig Arnold, Eaton chairman and CEO. “We believe this transaction will create substantial value for our shareholders and allow our hydraulics employees to be part of a company that has a strong commitment to the hydraulics industry.”
Providing products for customers in markets of agriculture, construction and industrial, Eaton’s Hydraulics business will be transferred into Danfoss’ existing Power Solutions unit, essentially doubling its scale. Danfoss had 2019 total sales of $7.0 billion and has about 28,000 employs. The Eaton Hydraulics addition increases Danfoss’ total company by roughly one-third in size.
“Hydraulics is our core, and we have for years strengthened our Power Solutions business through high customer focus, as well as through significant investments in technology leadership,” said Eric Alström, President of Danfoss Power Solutions. “I believe our customers will benefit from combining these two businesses into a full-line hydraulics player dedicated to innovation and with a broad offering of products, robust distribution channels and tremendous geographic reach.”
“We believe Eaton’s Hydraulics business will benefit greatly from being part of a company that has hydraulics at its core,” added Craig Arnold, Eaton Chairman and CEO. “When complete, this deal will bring together two talented teams with deep hydraulics knowledge and expertise. And Eaton’s hydraulics team will be part of a company that is committed to becoming a global leader in mobile and industrial hydraulics. The combined business will also benefit customers and distributors by offering industry-leading technology and a much broader portfolio of hydraulic solutions.”