Eaton’s announcement on 21 May 2012 of the intention to acquire their competitor Cooper Industries caused a stir in the market. The high purchase price, originally set at US $11.8bn (Cooper’s turnover in 2011 was around US $5.4bn) was also spectacular. The acquisition was concluded in December. Please start by telling us your specific strategic objectives with this acquisition.
This acquisition is the largest in our 101-year history and is viewed as ‘transformational’ for our power management and electrical business. The acquisition of Cooper Industries allows our company to significantly expand its ability to better meet customer demand for critical power management technologies in addressing the world’s growing energy needs.
Following the acquisition, we are now one of the largest, most global, highly technical electrical companies in the world. Every day, we look for new ways to solve our customer’s critical power management needs and expand the services and technologies around the world.
When we looked at Cooper Industries, we saw a great opportunity to strengthen Eaton’s ability to address the needs of an attractive set of customers in growing markets. By bringing together two exceptional companies, both with extraordinary talent, we are creating a Power Management powerhouse and are positioning ourselves for even greater success today and well into the future.
How will the merger of the two companies affect the product line? Where are the synergies, where are you entering new territory, and are there any overlaps?
Eaton and Cooper serve many of the same markets such as oil & gas but there is virtually no overlap in products or product-solutions – our technologies are truly complementary.
The combination of Eaton and Cooper enables us to offer one of the largest and broadest product, service, and solution portfolios serving the electrical marketplace. Together, we have the size and scale to successfully serve all of our markets with a more comprehensive set of integrated solutions. Our combined company now has even more opportunities to showcase technology and engineer innovative products and services to address the power management challenges faced by our customers.
What new target sectors will now be covered or opened up in addition to existing ones?
This acquisition brings a broader range of solutions to many of Eaton’s market segments. We can now combine our expertise in power management wherever electricity is used with an intense focus on one of the most important challenges of our time: the rising cost and environmental impact of the world’s growing energy needs. This is where our focus lies.
Added to Eaton’s already extensive electrical solutions offering, we are now positioned to win more business by providing real end-to-end solutions for customers in an even broader range of industrial, utility, commercial, and residential markets.
We are better positioned to address global needs for modernising grid infrastructure, managing energy consumption, and protecting people, equipment and data. With the range of solutions we can offer and the expertise of our people, we have an amazing opportunity to show what it truly means to be a customer-centric organisation.
Cooper Industries has seven divisions. How will they be integrated into the Eaton’s Electrical structure?
We anticipate the entire integration process will take 24 to 36 months, depending on business conditions. Teams comprised of employees from both Eaton and Cooper are working to achieve a smooth transition and maximize the opportunities of the combined enterprise.
Cooper is a market leader in the explosion-proof equipment sector. Will this be maintained as in independent business area within the Eaton structure, or will it be assigned to another area?
It’s too early to say categorically until the integration team has finished its work, but the Cooper Industries safety and reliability offering is strategically important to Eaton and will continue to be an important part of the business.
Cooper Industries will be fully absorbed by Eaton. Will the products also be ‘Eatonised’, or will the brands be maintained for the time being?
Eaton has a successful history of acquiring strong companies and brands. Brand transition is being considered by the integration team, following a well thought-out strategy. Considering the complexity of Cooper’s seven divisions and many brands, it’s too soon to discuss further specifics.
According to media reports, Eaton’s headquarters will be located in Ireland in the future. The reason given for this is the low corporate tax rate in that country. Will these plans be pursued? What does this move mean for your headquarters in the USA?
In order to complete this transaction, it became necessary to change our country of incorporation to Ireland. Eaton’s global headquarters will be in Ireland, and we continue to maintain corporate and regional centres in Cleveland, Ohio, Morges, Switzerland, Shanghai, and Sao Paulo. We continue to pay all taxes we are required to pay everywhere we operate around the world.
The ‘new’ Eaton has some 103,000 employees and an anticipated turnover of US $21.8bn. Does this make the company large enough now to mark a suitable conclusion to Eaton’s future strategy for many years, or will there still be more acquisition to come?
Acquisitions have played an important role in Eaton’s growth and transformation, and since 2000, our company has made 32 electrical acquisitions which have helped to grow and expand our capabilities worldwide. We will continue to focus on building the breadth and depth of the Eaton enterprise and will look for organic growth in all of our businesses, punctuated by strategic acquisitions where appropriate. However, at this time, we are focused on successfully integrating Cooper as well as several other 2012 acquisitions.
