Eaton Corp. Up on Pact to Buy Cobham Refueling Unit in $2.83B Deal

Eaton Corp. shares rise as the power-management-systems company agrees to buy Cobham Mission Systems in a $2.83 billion deal.
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Eaton Corp.  (ETN) - Get Report shares were higher Monday after the power-management-systems provider said it would buy Cobham Mission Systems, a maker of air-to-air refueling equipment, in a deal valued at $2.83 billion.

Under the terms, the purchase price includes $130 million of Cobham tax benefits.

Shares of Eaton, Dublin, at last check rose 1.4% to $119.38.

“Cobham Mission Systems’ highly complementary products and strong position on growing defense platforms will enhance our fuel systems business and position our aerospace business" for growth, Heath Monesmith, president and chief operating officer for Eaton's industrial sector, said in a statement.

Cobham Mission Systems is a unit of Cobham Plc, the U.K. producer of electronic warfare systems and communications for military vehicles

Parent Cobham in 2020 was bought by the Boston private-equity firm Advent International for 4 billion pounds ($5.47 billion).

The transaction, subject to regulatory clearances, is expected to close in the second half.

Excluding tax benefits, the deal price is 14 times CMS’s 2020 earnings before interest, taxes, depreciation and amortization and 13 times its estimated 2021 Ebitda, Eaton said.

Eaton was among stocks to benefit from President Joe Biden's plan on improving clean energy and the nation's waterworks, electric grid and universal 5G broadband, as picked by TheStreet's Stephen Guilfoyle.

Last month, Eaton named information-technology veteran Katrina Redmond as senior vice president and chief information officer.

Eaton sells products, systems and services that help customers manage electrical, hydraulic and mechanical power. The company also makes industrial clutches, motors, fuel pumps and other equipment.

It has more than 90,000 employees and generated more than $21 billion in sales in 2019.