Eaton Sells Hydraulics Unit for $3.3 Billion to Danfoss A/S

Eaton announced plans to sell its Hydraulics business to Danfoss A/S, a Danish industrial company, for $3.3 billion in cash. This represents a 13.2 multiple of 2019 EBITDA. 

Eaton’s Hydraulics business, which accounted for 86% of Eaton’s Hydraulics segment revenue in 2019, is a global leader in 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. Eaton is retaining the Filtration and Golf Grip businesses currently reported in the company’s Hydraulics segment.

“Today’s announcement is part of the ongoing transformation of Eaton into a higher growth company with better earnings consistency,” said Craig Arnold, Eaton chairman and CEO in the press release. “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.”

Eaton had total 2018 sales of $21.6 billion. Its electrical divisions accounted for approximately 61% of revenues in 2018, with the Electrical Products division logging $7.12 billion in 2018 sales and the Electrical Systems and Services business unit tallying $6.02 billion in sales. That percentage will decrease with its Oct. 2019 sales of the Cooper Lighting Solutions business.