Danfoss buys Eaton hydraulics segment | Rubber News

NORDBORG, Denmark—Danfoss A/S, which counts its power solutions business as one of its core assets, finally has completed its $3.3 billion acquisition of the hydraulics unit of Eaton Corp. nearly 19 months after the agreement was first reached.

The transaction, which closed Aug. 2, was contingent upon U.S. Department of Justice and European regulatory agency approval and the subsequent divestment of Danfoss and Eaton facilities in the orbital motor and hydraulics steering unit spaces. The tentative deal was announced in January 2020.

Eaton's hydraulics business, about 10 percent of Eaton's entire operations, combines with the Danfoss Power Solutions business segment, adding 10,000 employees to Danfoss and doubling the size of Danfoss' hydraulics operations. Overall, Danfoss A/S grew by one third with the acquisition from Dublin, Ireland-based Eaton.

Kim Fausing

"This is a great day for Danfoss as we welcome 10,000 new colleagues into the organization and create a global leader in mobile and industrial hydraulics," said Danfoss President and CEO Kim Fausing. "By combining the knowledge and experience of the two strong businesses and great teams, our customers will receive an unmatched level of service and expertise from a single partner.

"We will continue our significant investments to stay on the forefront of technology leadership and provide solutions that improve productivity and reduce emissions to meet the requirements of the future."

Eaton had $17.9 billion in sales in 2020 and has 96,000 employees globally. Its hydraulics business did $1.8 billion in sales in 2020, according to Eaton. The hydraulics unit includes a large presence in the manufacturing and sales of hydraulic and industrial hose.

Eric Alstrom

"The need for technologically innovative and industry-changing hydraulic solutions is as great as ever. We're very pleased to complete this significant investment in our core hydraulics business so we can serve our customers and partners even better than before," said Eric Alstrom, president of Danfoss Power Solutions. "Adding fluid conveyance and industrial applications are other assets gained through this transaction."

Divestments allay antitrust concernsAccording to the U.S. Department of Justice, approval of the multi-billion dollar sale involving the two largest suppliers of orbital motors for mobile off-road equipment in the U.S. required Danfoss to divest orbital motor and hydraulic steering unit facilities located in Hopkinsville, Ky.; Parchim, Germany; and Wroclaw, Poland.

Eaton divested two orbital motor production lines and one hydraulic steering unit production line from facilities in Shawnee, Okla., and Eden Prairie, Minn.

The U.S. Department of Justice said in a news release that, absent these divestitures, the Danfoss-Eaton deal would have led to "higher prices, decreased quality of delivery and service, and diminished innovation."The company to which the divested lines ultimately were sold was Interpump Group S.p.A., a provider of cylinders, pumps and valves with operations in North America, Europe, South America and Asia.

"Orbital motors and hydraulic steering units are essential components in equipment used in the agricultural, industrial and construction industries," said Acting Assistant Attorney General Richard A. Powers of the Justice Department's Antitrust Division. "The transaction, as originally proposed, would have led to higher prices and lower quality for original equipment manufacturers in these industries that are vital to the American economy.

"The remedy preserves competition in the manufacture and sale of these products for the benefit of equipment manufacturers and consumers."

The Justice Department filed the antitrust lawsuit July 14 in the U.S. District Court for the District of Columbia to block the Danfoss-Eaton transaction, but also filed the same day a proposed settlement.

The settlement was approved by the aforementioned court Aug. 2, resolving the competitive harm alleged in the antitrust lawsuit.

Paulo Ruiz

"This is an exciting new chapter for both of our businesses and our people, which are stronger together," said Paulo Ruiz, president of the former Eaton hydraulics business. "The new Danfoss Power Solutions team will create a global leader in mobile and industrial hydraulics, drawing on long legacies of innovation and industry-leading expertise. The combined product portfolio and broadened global reach will better serve customers and distributors all around the world."

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