Signify NV, (AMS: LIGHT) have agreed to buy Cooper Lighting Solutions solutions from Eaton Corp (NYSE: ETN) for $1.4 billion in cash.
The acquisition is the largest by Signify, the former Phillips lighting before they companies parted ways.
This forms part of an intention to strengthen its market position in North America.
Signify said the deal would add to earnings per share, and lead to cost savings of $60 million annually within three years.
The deal is expected to be completed in the first quarter of 2020, subject to regulation and approvals.
Cooper reported sales of $1.7 billion in 2018 and earnings before tax, interest and depreciation of $187 million.
Signify have also stated the intention to keep dividends consistent, and shareholders will only see a rise after the acquisition.
The main focus will be to reduce the debt of the combined company, as one of the short term goals was identified.
However, two major benefits have bene identified by Signify. The first said that Cooper will boost its revenues from 42% to 53% of total sales.
The firm also concluded that the takeover will deliver $60 million, in savings for the first three years of the deal. Those savings derive from cost synergies in materials, supply chain and sourcing optimization.
Eric Rondolat, CEO of Signifiy said “Today’s announcement confirms the strategic importance of the North American market for Signify. This acquisition will substantially strengthen our position in this attractive market”
Rondolat added “We look forward to welcoming the team from Cooper Lighting. They have built a highperformance company based on professionalism, truly innovative offers and a long and strong relationship with their customers. We share a genuine passion and single focus for Lighting and a successful track record in innovation. We will join forces to further develop connected lighting and provide our customers with the highest level of service while optimizing operational efficiencies.”
As a result, Signify have seen a 2.38% rise in their share price, trading at €24.47 per share, whilst Eaton Corporation Plc saw a smaller increase of 0.11% trading at $82.27 per share 16/11/19 15:11 BST.
