* Eaton to pay 29 pct premium for Cooper
* New Eaton to be incorporated in Ireland
* Cooper shares jump 25 pct, Eaton down 0.8 pct
May 21 Diversified industrial manufacturer Eaton
Corp struck a deal to buy electrical equipment maker
Cooper Industries for $11.8 billion in cash and stock,
paying a 29 percent premium to broaden its services to the
Eaton, announcing the deal on Monday, also said it would
reincorporate in Ireland, where Cooper is based.
Eaton will pay $72 per share for the acquisition: $39.15 in
cash and 0.77479 share for each Cooper share.
Cooper shares rose nearly 25 percent to $69.77 in morning
trading, while Eaton was down 0.8 percent at $42.08.
The deal will help Eaton diversify geographically, said
Catherine Avery, chief executive officer of CAIM LLC, which
holds shares of the company.
"It's a pretty amazing deal," Avery said. "They're going to
dominate that electrical power equipment segment. It's taking a
long-term point of view and saying: 'There are areas of the
globe that are expanding and when we do get into a better
economic environment, we're going to be there.'"
A deal this size will prompt smaller industrial companies to
consider selling themselves, Avery said, without identifying
Eaton said the deal should generate $535 million in annual
cost savings by 2016 and add to its earnings by 35 cents per
share in 2014 and 45 cents in 2015.
Eaton has secured a $6.75 billion bridge financing
commitment from Morgan Stanley and Citibank to pay
for the cash portion of the deal. It said it planned to issue
new debt, use cash on hand and possibly sell some assets to pay
down the loan.
Other large U.S.-listed industrial stocks were higher across
the board. Parker Hannifin Corp rose 1.9 percent, Emerson
Electric Co gained 0.6 percent and General Electric Co
was up 0.5 percent.
Citi and Morgan Stanley advised Eaton on the deal, while
Goldman Sachs advised Cooper.