by Christopher Freeburn | May 21, 2012 2:06 pm
Eaton (NYSE:ETN) will purchase Irish electrical manufacturer Cooper Industries (NYSE:CBE) for $11.8 billion and will re-incorporate in Ireland as Eaton Global Corp. PLC.
The deal values Cooper at $72 a share. Eaton will pay $39.15 in cash and issue 0.77479 of its own shares for each Cooper share. That means Eaton will pay a 29% premium to acquire the electrical products manufacturer, according to Reuters.
Cooper shares shot up more than 25% on Monday, breaking above $70 a share, while Eaton shares rose fractionally.
In order to finance the purchase, Eaton has arranged a $6.75 billion bridge loan through Morgan Stanley (NYSE:MS) and Citibank (NYSE:C). It will also rely on cash reserves and issue new debt.
The company said the acquisition of Cooper would boost its bottom line by 35 cents a share in 2014 and 45 cents the year after that. It would also cut costs by $535 million a year within four years.
Current Eaton Chairman and CEO Alexander Cutler will head the new company. Eaton shareholders will own roughly 73% of the combined company.
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