Join        Login             Stock Quote

Eaton (ETN) To Buy Cooper Industries (CBE) For $72/Shr, 29 Pct Premium

 May 21, 2012 10:34 AM

(By Balaseshan) Eaton Corp. (NYSE:ETN), a maker of power management products, said it agreed to buy Cooper Industries plc (NYSE:CBE) for $72.00 per share, a 29% premium over Friday's close, to broaden its focus in the electrical business.

Under the terms of the 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 on May 18, Cooper Shareholders will receive cash and shares valued at $72.00 per share, representing a premium of 29% and a total transaction equity value of about $11.8 billion.

[Related -Jobs Report Quells Taper Talk]

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 Cutler, Eaton's current chairman and chief executive officer.

Eaton Shareholders are expected to own about 73% of the combined company while legacy Cooper Shareholders are expected to own about 27%. 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 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 shareholders of Eaton and Cooper.

[Related -Futures Mixed After Jobs Data; Linkedin Corp (LNKD), Dell, Inc. (DELL) In Focus]

Eaton expects the deal to add 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 anticipated to be accretive to operating earnings per share by $0.65 in 2014 and by $0.75 in 2015.

The acquisition will be financed with a mixture of cash, debt, and equity. 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 intends to later refinance these bridge borrowings through a new term debt issuance, use of cash on hand, and the possible sale of assets.

CBE is trading 25.72% higher at $70.20 on Monday, while ETN gains 0.33% at $42.54.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageLong-term Relationships and Credit Scores

Unlike many commentators, I tend to think credit scores are a good read on...

article imageIn Defense Of Rolling Return Charts

Robeco’s Lukas Daalder has a bit of an issue with rolling-performance graphics. Bashing a recent chart of read on...

article imageThe S&P 500’s Worrisome Downturn In Drawdown

Last Friday I reviewed some of the bearish signals that were casting dark shadows across the US stock read on...

article imageADP: Private-Sector Employment Rises A Solid 200k In September

The pace of growth for private-sector employment picked up in September, according to this morning’s ADP read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.