Eaton Corp. is selling its hydraulics business, including rubber and plastic hose operations, to a European-based company that sees the acquisition as a major growth opportunity that would be difficult to build on its own.
Eaton will get $3.3 billion in cash in the deal and, in return, Danfoss A/S tacks on another $2.2 billion in annual hydraulics sales.
Acquiring Eaton's operations allows Danfoss to enter the hose manufacturing business for the first time, Eric Alstrom, president of Danfoss Power Solutions, said in a Jan. 23 interview. His unit is the largest division of Nordborg, Denmark-based Danfoss.
And that's a market Danfoss has been eyeing for some time.
"Eaton Hydraulics is a company we know very well and have been studying for many years actually. We know them as a great competitor in the industry. We met each other many times for the same types of projects," Alstrom said from a Danfoss plant in Germany.
"If you look at the types of products, the end markets that they serve, the business is also extremely interesting for us because we have always looked at the industrial market as well as fluid conveyance. Of course, it's exceedingly difficult to build those kinds of businesses from scratch," he said.
So, instead, Danfoss is acquiring Eaton's extensive hose and fittings business, he said.
"It's a very sizable part of Eaton Hydraulics' overall revenue. We don't give out exact numbers. But it is a very sizable business and particularly interesting with it is it has such a vast reach. There are many different types of products in their hose portfolio," Alstrom said.
Danfoss CEO Kim Fausing said this type of deal does not come around often.
"We take a significant and transformational step in creating a global leader in mobile and industrial hydraulics. It is a once-in-a-lifetime opportunity to combine our largely complementary portfolios and geographic footprints," Fausing said in announcing the deal.