Industrial manufacturer Eaton Corp. (>> Eaton Corporation) agreed to acquire electrical equipment supplier Cooper Industries PLC (CBE) in a roughly $11.8 billion cash-and-stock deal it expects will vastly expand its power management portfolio and electrical business.
The deal offers Cooper shareholders $72 a share in cash and stock, a 29% premium to its Friday close. Shares, which have never traded above the offer price, surged 25% in recent trade to $69.84.
Backed by both boards, the proposed tieup must now garner the approval of shareholders and regulators. If approved, Eaton and Cooper will be combined under a new company incorporated in Ireland, as Cooper is now.
The new company, tentatively set to be called Eaton Global Corp., will be led by current Eaton Chief Executive Alexander M. Cutler.
"This compelling combination of Eaton's power distribution and power quality equipment and systems with Cooper's diversified component brands, global reach and international distribution creates a game changer to serve the electrical industry," Cutler said in a statement Monday.
Eaton expects the combination with Cooper will begin adding to its operating earnings by 2014 and lend to roughly $535 million in annual synergies by 2016.
Cooper, which manufactures electrical products such as lighting fixtures and fuses, has benefited from an industrial rebound, with an added boost from its acquisitions. It has also seen growth in utility markets, though the construction market has remained weak.
Eaton, meanwhile, last month reported a gain in first-quarter earnings that was helped by a strong performance in its electrical business in the Americas.
Shares of Eaton were recently down 28 cents to $42.12. Through the Friday close, the stock is down 2.6% since the start of the year.
--By Mia Lamar, Dow Jones Newswires; 212-416-3207; [email protected]