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Summary
- Eaton buys Cobham Limited’s air-to-air refuelling arm for £2 billion.
- The engineering company aims to bolster its presence in the air-to-air refuelling space through this acquisition.
- Eaton Corp is also bolstering its power supply systems as it is set to acquire Chicago based power solutions business, Tripp Lite For $1.65 billion.
American Irish-domiciled multinational engineering firm Eaton Corporation Plc (NYSE:ETN) has bought British aerospace manufacturing company Cobham Limited’s air-to-air refuelling arm for £2 billion. The amount paid by Eaton for Cobham’s division is nearly 13 times of its estimated EBIDTA for 2021 and 14 times of its EBIDTA for 2020. This acquisition is expected to be completed in the second half of 2021. However, it is subjected to customary closing conditions.
Also read: Takeover Of The Defence Giant Cobham Plc Gets The Government’s Go-ahead
Established in 1934, Cobham Limited was bought by private equity group Advent International for £4 billion last year. The NYSE-listed engineering business Eaton Corp has agreed to buy Cobham Mission Systems division, which employs around 2,000 people, and specialises in refuelling systems and environmental systems for the defence sector to strengthen its aerospace business.
(Image source: ©Kalkine Group 2020)
Ahead of being sold to Advent International, the challengers of the deal had predicted that the private equity group will break up Cobham and sell it into parts, division by division to the highest bidder. Notably, CMS has been one of the main divisions of Cobham Limited. Post the takeover, Advent International restructured Cobham Limited into nine separate divisions.
Eaton Corp specialises in devising explosion-proof instruments, hydraulic power units, pumps, and motors. The Dublin-based company aims to deploy power management technologies and services that led to sustainable solutions for managing, electrical, hydraulic, and mechanical equipment’s and improve the quality of life.
Eaton Corp can leverage upon its strong aerospace and defence experience and sound financial health to integrate the CMS business and derive value out of it for all its stakeholders. The engineering company aims to bolster its presence in the air-to-air refuelling space through this acquisition.
On the other hand, Eaton Corp is also bolstering its power supply systems as it is set to acquire Chicago-based power solutions business Tripp Lite for $1.65 billion, which is 11 times of its projected earnings before interest, taxes, depreciation, and amortisation for 2021.
Tripp Lite is a quality provider of power systems, including single-phase UPS systems that are used across American region in industrial, medical, and communications markets. Eaton is expecting this transaction to complete by mid of 2021. The company aims to expand its single-phase UPS business and bolster its computing and IT product portfolio.
Shares of ETN closed at US $121.54 on 1 February, up by 3.26 per cent from previous day close price.
