Complementary Products and Markets Create Opportunities for Growth in Global Electrical Industry----- Cooper Shareholders to Receive $39.15 per Share in Cash and 0.77479 in Ordinary Shares for 29% Premium; Transaction Equity Value of $11.8 Billion----- Transaction Expected to be Accretive to EPS in 2014
CLEVELAND, OHIO and DUBLIN, IRELAND - (May 21, 2012) - Diversified industrial
Cooper Industries plc (NYSE: CBE) ("Cooper") today announced they have entered into a
definitive agreement 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.
The announcement required under the Irish Takeover Rules has been made (the "Rule 2.5
Announcement") and is available at www.eaton.com.
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. Its electrical business is a
global leader in power distribution, power quality, control and automation, power monitoring,
and energy management products and services. Eaton is positioned to answer today's most
critical power management challenges through its electrical, aerospace, hydraulics and
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.
"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, and it is expected to enhance shareholder value by:
• Leveraging complementary product offerings between Eaton and Cooper's electrical
• Accelerating long-term growth potential by increasing exposure to attractive end markets
and service opportunities.
• Better satisfying customer global demands for energy efficiency and electrical safety.
• Generating approximately $535 million in expected annual synergies by 20161.
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 20152. The Acquisition will be
financed with a mixture of cash, debt, and equity.
Under the terms of the Transaction Agreement, 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 Friday 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 billion3. Eaton Shareholders will receive one
share of the new company for each share of Eaton that they own upon closing. The
transaction will be taxable, for U.S. federal income tax purposes, to both the Eaton
Shareholders and the Cooper Shareholders.
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. Eaton plans to later refinance these bridge
borrowings through a new term debt issuance, use of cash on hand, and the possible sale of
1 The total expected annual synergies of $535 million comprise $375 million of pre-tax operating synergies, and $160 million of global cash
management and resultant tax benefits related to the combined company being incorporated in Ireland.
2 The statement that this acquisition is earnings accretive should not be interpreted to mean that the earnings per share in the current or any
future financial period will necessarily match or be greater than those for the relevant preceding financial period.
3 The fully diluted share capital of Cooper assumes full exercise of the outstanding Cooper share options and vesting of outstanding share
awards under the Cooper Share Plans.
The combination is subject to the terms of a Transaction Agreement among Eaton, Cooper,
New Eaton and certain other parties. The acquisition of Cooper by New Eaton will be
effected by means of a "scheme of arrangement" under Irish law pursuant to which New
Eaton will acquire all of the outstanding shares of Cooper from Cooper Shareholders for cash
and shares (the "Acquisition"). The Acquisition will be subject to the terms and conditions to
be set forth in the scheme of arrangement document to be delivered to Cooper Shareholders.
To become effective, the scheme of arrangement will require, among other things, the
approval of a majority in number of Cooper Shareholders, present and voting either in person
or by proxy at a special Cooper Shareholder meeting, representing 75 percent or more in
value of the Cooper shares held by such holders. Following the requisite Cooper Shareholder
approval being obtained, the sanction of the Irish High court is also required. In addition, the
Transaction Agreement must be adopted by shareholders holding two-thirds of the
outstanding voting shares of Eaton in a special shareholder meeting. The Acquisition, which
is unanimously recommended by the Boards of Directors of both companies, also is subject
to receipt of certain regulatory approvals and certain other conditions, as more particularly set
out in Appendix III to the Rule 2.5 Announcement.
CONFERENCE CALL WITH EATON AND COOPER MANAGEMENT AT 10:00 AM EASTERN, MAY 21,2012
Eaton's and Cooper's conference call to discuss this transaction is available to all interested
parties as a live teleconference today at 10 a.m., Eastern time, in the U.S. at the following
phone numbers: U.S.: 800 288 8960; international: +1 612 288 0340. The confirmation
number is 249387. This news release can be accessed under its headline on the Eaton
home page at www.eaton.com. Also available on the website prior to the call will be a
presentation on this transaction that will be covered during the call.
Eaton is a diversified power management company with more than 100 years of experience
providing energy-efficient solutions that help our customers effectively manage electrical,
hydraulic and mechanical power. With 2011 revenues of $16.0 billion, Eaton is a global
technology leader in electrical components, systems and services for power quality,
distribution and control; hydraulics components, systems and services for industrial and
mobile equipment; aerospace fuel, hydraulics and pneumatic systems for commercial and
military use; and truck and automotive drivetrain and powertrain systems for performance,
fuel economy and safety. Eaton has approximately 72,000 employees and sells products to
customers in more than 150 countries.
Cooper is a diversified global manufacturer of electrical components and tools, with 2011
revenues of $5.4 billion. Founded in 1833, Cooper's sustained success is attributable to a
constant focus on innovation and evolving business practices, while maintaining the highest
ethical standards and meeting customer needs. Cooper has seven operating divisions with
leading positions and world-class products and brands including Bussmann electrical and
electronic fuses; Crouse-Hinds and CEAG explosion-proof electrical equipment; Halo and
Metalux lighting fixtures; and Kyle and McGraw-Edison power systems products. With this
broad range of products, Cooper is uniquely positioned for several long term growth trends
including the global infrastructure build out, the need to improve the reliability and productivity
of the electric grid, the demand for higher energy-efficient products and the need for
improved electrical safety. In 2011, 62% of total sales were to customers in the industrial and
utility end-markets and 40% of total sales were to customers outside the United States.
Cooper has manufacturing facilities in 23 countries as of 2011.