Eaton Buys Aeroequip-Vickers

Shares of Aeroequip-Vickers flew up 58 percent Monday morning after Eaton said it's buying the aerospace parts firm for $58 per share in a deal worth $1.7 billion.

Shares of Maumee, Ohio-based Aeroequip-Vickers (ANV) shot up 20 7/16 to 55 11/16 Monday morning. Eaton (ETN) fell 1 7/8 to 67 3/4.

The deal is expected to close in April.

"This acquisition enables Eaton to achieve that critical objective: building upon and extending Eaton's strong position in mobile hydraulics," Eaton Chairman and CEO Stephen R. Hardis said in a statement. "With Vickers, we acquire a global leader in industrial hydraulics and the combined scale of $1.1 billion to serve mobile and industrial customers."

Eaton and Aeroquip-Vickers will create an aerospace hydraulics business with sales of $700 million, and systems capability across all hydraulics applications, he said.

The acquisition will be neutral to Eaton earnings this year, excluding first-year transition costs, but will add about $1 per share to annual earnings by years 2002 to 2004.

Aeroquip-Vickers, which is based in the Toledo suburb of Maumee, includes Aeroquip Corp. and Vickers Inc. It has 15,000 employees and 50 plants in 15 countries.

Darryl F. Allen, chairman of Aeroquip-Vickers, said the combined company would be a stronger competitor.

"It is clear that to successfully compete, a firm must supply complete product lines and global platforms," he said. "At $2.2 billion (in annual sales) Aeroquip-Vickers is too small to realize the full advantage of its strengths. Adding Aeroquip-Vickers to Eaton, however, creates an impressive force."

Cleveland-based Eaton has 49,500 employees in 155 plants in 25 countries and 1998 sales of $6.6 billion.

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