Cooper Industries Inc., Houston, said it plans to move forward with plans to reincorporate in Bermuda after Danaher Corp., Washington, dropped an unsolicited $7 billion bid for Cooper and no other buyers emerged.
Cooper, which put itself up for sale after receiving a takeover offer from Danaher Corp. in August, said it made the decision after receiving no other bids for the company. Danaher announced Feb. 12 that it had decided not to pursue the acquisition of Cooper because of concerns about potential asbestos liabilities and a tough business environment.
H. Lawrence Culp Jr., Danaher's president and chief executive, said, “We are disappointed to have arrived at this decision. We continue to believe that Cooper is an attractive company that would fit well with our existing businesses. However, in light of the current difficult business environment and sensitivities with respect to asbestos liability, we have concluded not to pursue the acquisition of Cooper at this time.”
Currently incorporated in Ohio, Cooper said the move to Bermuda would add 58 cents a share to annual earnings and add about $55 million to annual cash flow. As a result of the move, its tax rate is expected to fall to 20 percent to 25 percent from a current 32 percent.
Cooper initially planned to reincorporate in Bermuda last year, but it canceled those plans when Danaher made its bid in August.
“This change will enhance Cooper's strategic flexibility, and our reduced global tax position will significantly increase cash flow — enabling us to further strengthen our balance sheet and better position us to pursue worldwide growth opportunities,” H. John Riley Jr., Cooper's chairman, president and chief executive, said in a news release.
Going foward, the company said it plans to continue to invest in revenue growth initiatives, including the Cooper Connection distributor-relationship program, which is designed to broaden market coverage and enhance service to distributor and end-user customers; continue to restructure business units and exit underperforming product lines. Cooper's reincorporation is expected to take place in the second quarter.
Cooper said the reincorporation would have no impact on its day-to-day operations for employees, customers and suppliers. Cooper, which will continue to have its headquarters in Houston, plans to hold a special meeting of shareholders to vote on the move.