Attached files
| file | filename |
|---|---|
| 8-K - 8-K - EATON CORP | d356808d8k.htm |
| EX-99.1 - EX-99.1 - EATON CORP | d356808dex991.htm |
 ©
2012 Eaton Corporation. All rights reserved.
Acquisition of Cooper Industries plc
Eaton Corporation
Sandy Cutler
May 21, 2012
Exhibit 99.2 |
 2
©
2012 Eaton Corporation. All rights reserved.
This
communication
is
not
intended
to
and
does
not
constitute
an
offer
to
sell
or
the
solicitation
of
an
offer
to
subscribe
for
or
buy
or
an
invitation
to
purchase
or
subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant
to the acquisition or otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
A registration statement on Form S-4 will be filed that will include the Joint Proxy Statement of
Eaton Corporation (“Eaton”) and Cooper Industries plc (“Cooper”) that
also
constitutes
a
Prospectus
of
Eaton
Global
Corporation
Plc
(1)
(“Eaton
Global
Plc”).
Eaton
and
Cooper
plan
to
mail
to
their
respective
shareholders
(and
to Cooper Equity Award Holders for information only) the Joint Proxy Statement/Prospectus (including
the Scheme) in connection with the transactions. Investors and shareholders are urged to read the
Joint Proxy Statement/Prospectus (including the Scheme) and other relevant documents filed or to
be filed with the SEC carefully when they become available because they will contain important
information about Eaton, Cooper, Eaton Global Plc, the
transactions
and
related
matters.
Investors
and
security
holders
will
be
able
to
obtain
free
copies
of
the
Joint
Proxy
Statement/Prospectus
(including
the
Scheme)
and
other
documents
filed
with
the
SEC
by
Eaton
Global
Plc,
Eaton
and
Cooper
through
the
website
maintained
by
the
SEC
at
www.sec.gov.
In
addition,
investors
and
shareholders
will
be
able
to
obtain
free
copies
of
the
Joint
Proxy
Statement/Prospectus
(including
the
Scheme)
and
other
documents
filed
by Eaton and Eaton Global Plc with the SEC by contacting Don Bullock from Eaton by calling (216)
523-5127, and will be able to obtain free copies of the Joint Proxy
Statement/Prospectus
(including
the
Scheme)
and
other
documents
filed
by
Cooper
by
contacting
Cooper
Investor
Relations
at
c/o
Cooper
US,
Inc.,
P.O.
Box 4466, Houston, Texas 77210 or by calling (713) 209-8400.
Cooper,
Eaton
and
Eaton
Global
Plc
and
their
respective
directors
and
executive
officers
may
be
deemed
to
be
participants
in
the
solicitation
of
proxies
from
the
respective
shareholders
of
Cooper
and
Eaton
in
respect
of
the
transactions
contemplated
by
the
Joint
Proxy
Statement/Prospectus.
Information
regarding
the
persons
who
may,
under
the
rules
of
the
SEC,
be
deemed
participants
in
the
solicitation
of
the
respective
shareholders
of
Cooper
and
Eaton
in
connection
with
the proposed transactions, including a description of their director or indirect interests, by
security holdings or otherwise, will be set forth in the Joint Proxy Statement/Prospectus
when
it
is
filed
with
the
SEC.
Information
regarding
Cooper's
directors
and
executive
officers
is
contained
in
Cooper's
Annual
Report
on
Form 10-K for the year ended December 31, 2011 and its Proxy Statement on Schedule 14A, dated
March 13, 2012, which are filed with the SEC. Information regarding Eaton's directors and
executive officers is contained in Eaton's Annual Report on Form 10-K for the year ended December 31, 2011 and its Proxy
Statement
on
Schedule
14A,
dated
March
16,
2012,
which
are
filed
with
the
SEC.
(1)
Expected name, or a variant thereof
The
directors
of
Eaton
Corporation
accept
responsibility
for
the
information
contained
in
this
communication.
To
the
best
knowledge
and
belief
of
the
directors
of Eaton Corporation (who have taken all reasonable care to ensure such is the case), the information
contained in this communication is in accordance with the
facts
and
does
not
omit
anything
likely
to
affect
the
import
of
such
information. |
 3
©
2012 Eaton Corporation. All rights reserved.
Forward Looking Statements
This presentation may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 concerning Eaton, Eaton Global Plc, the acquisition
and other transactions contemplated by the Transaction Agreement, our acquisition financing,
our long-term credit rating and our revenues and operating earnings. These statements or disclosures may discuss goals,
intentions and expectations as to future trends, plans, events, results of operations or financial
condition, or state other information relating to Eaton or Eaton Global Plc, based on current
beliefs of management as well as assumptions made by, and information currently available to,
management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,”
“estimate,” “expect,” “forecast,” “guidance,”
“intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or
expressions. These forward-looking statements are subject to various risks and uncertainties, many
of which are outside of our control. Therefore, you should not place undue reliance on such
statements. Factors that could cause actual results to differ materially from those in
the forward-looking statements include adverse regulatory decisions; failure to satisfy other closing conditions with respect to the
Acquisition; the risks that the new businesses will not be integrated successfully or that we will not
realize estimated cost savings and synergies; our ability to refinance the bridge loan on
favorable terms and maintain our current long-term credit rating; unanticipated changes in
the markets for our business segments; unanticipated downturns in business relationships with customers or their purchases
from Eaton; competitive pressures on our sales and pricing; increases in the cost of material, energy
and other production costs, or unexpected costs that cannot be recouped in product pricing; the
introduction of competing technologies; unexpected technical or marketing difficulties;
unexpected claims, charges, litigation or dispute resolutions; new laws and governmental regulations. The foregoing
list of factors is not exhaustive. You should carefully consider the foregoing factors and the
other risks and uncertainties that affect our business described in our Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other
documents filed from time to time with the SEC. We do not assume any obligation to update these
forward-looking statements.
No statement in this presentation is intended to constitute a profit forecast for any period, nor
should any statements be interpreted to mean that earnings or earnings per share will
necessarily be greater or lesser than those for the relevant preceding financial periods for Eaton. |
 4
©
2012 Eaton Corporation. All rights reserved.
Eaton’s acquisition of Cooper results in…
•
A combination of two leading industrial companies with
complementary electrical businesses
•
$21.5B combined 2011 sales
•
$3.1B combined 2011 EBITDA
•
An enterprise increasingly well positioned for growth through
addressing global power management needs
•
Significant synergies
•
Win-win for both companies’
shareholders
•
29% premium for Cooper with significant cash component
•
Accretion
to
earnings
benefits
both
companies’
shareholders
as the continuing owners of Eaton Global Plc |
 5
©
2012 Eaton Corporation. All rights reserved.
Transaction overview
Combined
company
•
Premier power management company with 2011 sales of $21.5B
•
Under the leadership of Eaton management
•
Named Eaton Global Plc and will continue to trade on NYSE as ETN
•
Incorporated in Ireland
Consideration
•
Cooper shareholders will receive $39.15 in cash and 0.77479 ETN Plc
shares, reflecting a 29% equity premium to the closing price on May 18
•
Eaton shareholders will receive 1 ETN Plc share
Financing
•
Fully committed bridge financing in place
Financial
benefits
•
$375M operating synergies, with >80% realized by year 3, and $160M
global
cash
management
and
resultant
tax
benefits
in
the
mature
year
(1)
•
Significantly accretive to Eaton’s earnings
Timing
•
Expect closing in the fall of 2012
•
Conditional on customary regulatory and shareholder approvals
(1)
The financial benefits statements have been reported on in accordance with the Irish Takeover
Code. Please see the offer announcement dated May 21,
2012 for further details. |
 6
©
2012 Eaton Corporation. All rights reserved.
Benefits to Cooper shareholders
•
Recommended bid with the full support of Cooper’s Board of
Directors
•
Bid reflects full value for the company
•
29% equity premium to the closing price on May 18, 2012
•
Attractive EV/EBITDA
ltm
multiple of 12.9x
(1)
, significantly above the multiple at
closing on May 18, 2012 of 10.0x
•
Consideration provides certainty of value given the high cash
component
•
Equity component provides upside to shareholders
•
Strategically compelling combination
(1)
Assumes the purchase of all outstanding Cooper stock options for cash and share consideration |
 7
©
2012 Eaton Corporation. All rights reserved.
Eaton’s strategy remains consistent
•
A premier
power
management
enterprise
run
as
an
integrated
operating company
serving customers globally
•
Provide innovative, safe, reliable, and efficient electrical,
hydraulic, and mechanical solutions across diverse end markets
•
Focus upon one of the most important challenges of our
time…reducing the rising cost and increasing environmental
impact of the world’s growing energy needs
•
Maintain balance across geographies, the economic cycle, and
our business mix
•
Build on our leadership positions through acquisitions in our
Electrical, Hydraulics, and Aerospace businesses |
 8
©
2012 Eaton Corporation. All rights reserved.
Corporate goals for 2015
Returns
Performance
Growth
Note:
Segment Margin excludes acquisition integration charges
16%
segment
margin
12-14%
sales
growth
9% free
cash flow
margin
30% of
sales from
emerging
markets
2015
Goals
20%
earnings
growth
15% ROIC |
 9
©
2012 Eaton Corporation. All rights reserved.
Acquisitions have played a large role in growing
our electrical business
Electrical Group
Acquisitions
Year
Acq’d
Sales
Market Participation
Regional Strength
Power Control
& Distribution
Power
Quality
Lighting &
Safety
Americas
EMEA
Asia-
Pacific
Cutler Hammer
1978
$0.6B
Westinghouse DCBU
1994
$1.0 B
Delta Electrical
2003
$0.3 B
Powerware
2004
$0.8 B
MGE Small Systems
2007
$0.2 B
Moeller
2008
$1.5 B
Phoenixtec
2008
$0.5 B
Cooper
2012
$5.4 B
28 other Electrical acquisitions since 1990
|
 Our
acquisition program has helped drive strong shareholder returns
|
 11
©
2012 Eaton Corporation. All rights reserved.
Cooper is an electrical industry leader
•
Leading and innovative manufacturer of electrical equipment with
$5.4B sales and 14.0% operating margin in 2011
•
Wide range of electrical products
•
100+ year reputation in industrial, utility, and commercial markets with leading
brands •
Serves global customers with a suite of electrical products enhancing
energy efficiency and safety across varied end markets
•
Strong U.S. presence (60% of sales), with growing international focus (40% of
sales) •
Sales presence in over 100 countries
•
Manufacturing in 23 countries
•
26,000 employees worldwide
•
Driving growth organically through:
•
Expanding into emerging markets
•
Targeting high-growth industry verticals such as oil & gas, mining,
utilities •
Innovative new products with 29% of sales from new products
•
Customer centric sales organization and sales processes
|
 12
Cooper has a wide range of complementary
electrical businesses
•
Cooper Power Systems
•
$1.3 B sales
•
Market leader in
distribution grid
protection
•
Crouse-Hinds
•
$1.0 B sales
•
Global leader in electrical
solutions for harsh and
hazardous environments
•
Safety
•
$600 M sales
•
Leading European
provider of emergency
lighting and video
security
Energy and Safety Solutions ($2.9 B sales)
12
Electrical Products ($2.5 B sales)
•
Lighting
•
$1.1 B sales
•
Strong LED
platform
driving growth
•
Bussmann:
•
$650 M sales
•
Global leader
in
circuit protection
•
B-Line Support structures
•
$400 M sales
•
Global provider
of
structural systems and
wire
management solutions
•
Wiring devices
•
$350 M sales
•
Electrical devices
for
commercial and residential power distribution |
 13
©
2012 Eaton Corporation. All rights reserved.
•
Broad portfolio of complementary products
•
Market segment expansion:
•
Upstream into power solutions encompassing primary and
secondary distribution, grid automation, and smart grid
•
Downstream into lighting, lighting controls, and wiring devices
•
Expands our solutions with all channels
•
Well positioned to address long-term global requirements
•
Aging grid
•
Increased spending on energy & infrastructure
•
Protecting people, equipment and data
The strategic rationale for this acquisition is
compelling -
I |
 14
©
2012 Eaton Corporation. All rights reserved.
•
Aligns with our customer segment focus in oil & gas, mining,
energy efficiency and alternative energy
•
Adds breadth to our global geographic exposure
•
Attractive business in EMEA
•
Strong oil & gas industry positioning globally
•
Complementary component and utility business in APAC
•
Offers improved cash management flexibility for the
corporation
The strategic rationale for this acquisition is
compelling -
II |
 Eaton’s present electrical solutions are focused
upon four broad sets of capabilities
POWER
DISTRIBUTION
POWER
QUALITY
SERVICE
CONTROL
Eaton Power Expertise…
…
accessible and applied
Access to:
Residential, non residential
construction and utilities
Access to:
Data Center
and IT markets
Access to:
Machine builders
and the factory floor
Access to:
Energy efficiency,
infrastructure &
maintenance
Leading products capture attention…
…broad capabilities deliver solutions
©
2012 Eaton Corporation. All rights reserved.
15 |
 ©
2012 Eaton Corporation. All rights reserved.
|
 17
Our integrated operating company capabilities
(EBS) will drive significant synergies
(1)
($M)
2013
2014
2015
2016
Pre-tax operating synergies
Sales synergies
10
35
70
115
Cost-out synergies
65
140
240
260
Total operating synergies
75
175
310
375
Global cash management and resultant tax benefits
160
160
160
160
Acquisition integration costs, pre-tax
90
75
35
-
•
$260M in cost out synergies with over 90% complete by 2015
•
$200M in acquisition integration charges with ~80% incurred through 2014
Integration plans
Synergies
(1)
The financial benefits statements have been reported on in accordance with the
Irish Takeover Code. Please see the offer announcement dated May 21,
2012 for further details. |
 18
©
2012 Eaton Corporation. All rights reserved.
The acquisition is accretive to earnings
(1)
($)
2013
2014
2015
2016
Operating EPS Accretion
(1)
(0.10)
0.35
0.45
0.55
Cash Operating EPS Accretion
(1,2)
0.40
0.65
0.75
0.85
Accretion
(1)
EPS accretion numbers do not represent a profit forecast as defined in the Irish
Takeover Code (2)
Cash Operating EPS excludes incremental amortization of intangibles arising from
purchase accounting |
 19
©
2012 Eaton Corporation. All rights reserved.
Cooper enhances Eaton’s revenue mix
Electrical
Hydraulics
Aerospace
Truck
Automotive
Eaton
Cooper
NewCo
100% Electrical
U.S.
International Developed
Emerging
Note: Based on 2011 sales
100% Electrical
11%
45%
16%
10%
18%
EPG
46%
E&SS
54%
8%
12%
8%
13%
59%
45%
27%
28%
21%
19%
60%
25%
26%
49%
0% |
 20
©
2012 Eaton Corporation. All rights reserved.
Financing plan for transaction
•
Bridge loan and cash on hand to fund cash
component of the consideration
•
Plan to replace bridge loan with approximately
$5.1B of term debt in several tranches with varied
tenors
•
In the medium term, we are targeting a return to an
A credit rating for our long term debt
Note: At the closing of the acquisition, Eaton Global Plc will be assuming and
guaranteeing the outstanding debt of Cooper Industries plc
|
 21
©
2012 Eaton Corporation. All rights reserved.
We expect the transaction to close this fall
Announcement
Shareholder votes
Post proxy statement
and scheme document
Regulatory filings
Expected close
Bridge financing
commitment in place |
 22
©
2012 Eaton Corporation. All rights reserved.
Eaton’s acquisition of Cooper results in…
•
A combination of two leading industrial companies with
complementary electrical businesses
•
$21.5B combined 2011 sales
•
$3.1B combined 2011 EBITDA
•
An enterprise increasingly well positioned for growth through
addressing global power management needs
•
Significant synergies
•
Win-win for both companies’
shareholders
•
29% premium for Cooper with significant cash component
•
Accretion
to
earnings
benefits
both
companies’
shareholders
as the continuing owners of Eaton Global Plc |
 |