Eaton Takes On $2.8B in Acquisitions

Cleveland-based diversified industrial equipment maker Eaton Corp. (ETN) announced early Thursday it plans to make two overseas acquisitions with a mix of cash, debt and equity, worth as much as $2.8 billion. Eaton said it will acquire The Moeller Group, a private equity-owned German electrical components maker, for €1.55B ($2.23B). Moeller's estimated 2007 Ebitda is $245M, on sales of $1.47B. Pending customary closing conditions, the deal is expected to close in Q1.

Separately, Eaton has launched a tender offer for Taiwan-based Phoenixtec Power, a manufacturer of uninterruptible power supply systems. Eaton is offering NT$50/share ($1.54), for a net purchase price of $565M for all shares outstanding. Phoenixtec's chairman and board members have already agreed to tender 25% of the company's shares. Phoenixtec's estimated 2007 Ebitda is $52M on sales of $495M. Eaton CEO Alexander M. Cutler, said the acquisitions are expected to be neutral to operating EPS in 2008 and accretive by $0.25 to $0.35 in 2009. Eaton's overall 2008 outlook is for operating EPS growth of 15% to 20%, on sales growth of 25%. Shares of Eaton rose 0.4% to $89.42 on Wednesday.

Sources: Press release, MarketWatch, Reuters
Additional Reading: Eaton Beats Q3 Estimates, But Lowers Outlook • Eaton Corporation Q3 2007 Earnings Call Transcript

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