Power management company Eaton announced Jan. 21 that it has entered into an agreement to sell its hydraulics business to Danfoss A/S, a Danish industrial company, for $3.3 billion.
Eaton’s hydraulics business, which accounted for 86% of Eaton’s hydraulics segment revenue in 2019, provides hydraulics components, systems, and services for industrial and mobile equipment. The business had sales of $2.2 billion in 2019 and employs approximately 11,000 people.
The Danfoss and Eaton hydraulics businesses are global with complementary geographic footprints and the combined business creates a broader presence across the world. Furthermore, the acquisition will enable Danfoss to enter the industrial hydraulics market that is served by Eaton Hydraulics, it says.
Eaton Hydraulics provides products for customers in markets such as agriculture, construction and industrial market segments. The business will be transferred into the existing Danfoss business segment, Danfoss Power Solutions, adding approximately 11,000 employees and 2019 sales of $2.2 billion to the business segment.
Danfoss currently has approximately 28,000 employees and 2019 sales of $7.0 billion. Accordingly, with this transaction, the company will increase its size by one-third, it says.
Eaton is retaining the filtration and golf grip businesses currently reported in the company’s hydraulics segment, it says.
“Today’s announcement is part of the ongoing transformation of Eaton into a higher growth company with better earnings consistency,” says Craig Arnold, Eaton chairman and chief executive officer. “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.”
Danfoss reports that the acquisition is fully in line with its strategy to strengthen its core businesses and enhance customer value.
“Today, we take a significant and transformational step in creating a global leader in mobile and industrial hydraulics. 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,” says Kim Fausing, Danfoss President and CEO.
The transaction is subject to customary closing conditions and regulatory approvals, and is expected to close by the end of the year. More information will be provided during Eaton’s quarterly conference call on Feb. 4.
