Danfoss has entered into an agreement to acquire Eaton’s Hydraulics business, creating a “global leader in mobile and industrial hydraulics”, Kim Fausing, Danfoss’ President and CEO, says.
The company has agreed to pay $3.3 billion for the business, explaining that the acquisition is fully in line with Danfoss’ strategy to strengthen its core businesses and enhance customer value.
Fausing said the deal was a “once-in-a-lifetime opportunity” to combine the two companies’ largely complementary portfolios and geographic footprints.
“Eaton Hydraulics is a highly respected player in the global industry, recognised for its dedicated people and strong brands. By combining the knowledge and experience of the two businesses, our customers will benefit from unmatched expertise from a single partner,” he said.
“With this agreement, we continue to invest in our core hydraulics business and digital solutions to stay a strong technology partner.”
Craig Arnold, Eaton Chairman and CEO, said Eaton’s Hydraulics business will benefit greatly from being “part of a company that has hydraulics at its core”.
He added: “When complete, this deal will bring together two talented teams with deep hydraulics knowledge and expertise. And Eaton’s hydraulics team will be part of a company that is committed to becoming a global leader in mobile and industrial hydraulics. The combined business will also benefit customers and distributors by offering industry-leading technology and a much broader portfolio of hydraulic solutions.”
Danfoss says the two businesses are leaders in the industry and have many organisational similarities, including company culture and a focus on customers, R&D and quality. The combined business creates a broader presence across the world, while enabling Danfoss to enter the industrial hydraulics market served by Eaton Hydraulics, the company explained.
Eaton Hydraulics provides products for customers in markets such as agriculture, construction and industrial markets. It also supplies mining companies with harsh duty cycle component solutions and services.
The business will be transferred into the existing Danfoss business segment, Danfoss Power Solutions, adding around 11,000 employees and 2019 sales of $2.2 billion to the business segment, which will double the hydraulics business. Danfoss, today, has some 28,000 employees and 2019 sales of $7 billion. Accordingly, with this transaction, Danfoss will increase its size by one-third.
Eric Alström, President of Danfoss Power Solutions, said: “Hydraulics is our core, and we have for years strengthened our Power Solutions business through high customer focus, as well as through significant investments in technology leadership.
“I believe our customers will benefit from combining these two businesses into a full-line hydraulics player dedicated to innovation and with a broad offering of products, robust distribution channels and tremendous geographic reach.”
The transaction is subject to customary closing conditions and regulatory approvals and is expected to close by the end of the year.