Power management giant Eaton Corp. (NYSE: ETN) has agreed to sell its lighting business to Signify N.V. (Euronext:LIGHT), the Dutch company formerly known as Philips Lighting, for $1.4 billion.
The decision to sell the lighting business, known as Cooper Lighting, “comes after completing a comprehensive review of various potential transaction alternatives to maximize shareholder value,” Eaton said in a news release issued late Tuesday, Oct. 15. Craig Arnold, Eaton’s chairman and CEO, said in a statement that the deal is “another example of how we are actively managing our portfolio to create value for our shareholder.”
The sale of Cooper Lighting, which is based in Peachtree City, Ga., represents a change of course for Eaton. The company in March announced its intent “to pursue a tax-free spinoff” of the lighting business and “create an independent, publicly traded company” by the end of 2019.
Eaton said in Tuesday’s release that the sale of the lighting business to Signify is subject to customary closing conditions and regulatory approvals. It’s expected to close in the first quarter of 2020, according to Eaton, which is headquartered in Dublin, Ireland, but has its North American headquarters in Beachwood.
The lighting business generated sales of $1.7 billion in 2018. It serves customers in commercial, industrial, residential and municipal markets.
Reuters reported that the acquisition is the largest by Signify, the world’s largest lighting maker, since it was spun off from Philips in 2016. The deal “aims to boost Signify’s position in the global professional lighting market, where it is the No. 2 player, and in North America, where it suffers from a lack of scale,” according to Reuters.
In its own news release on the deal, Signify noted that 84% of Cooper Lighting’s sales are LED-based.
Signify and Cooper Lighting “will maintain separate front offices: sales forces, agent networks, product and brand portfolios, marketing and product development teams,” according to the Signify release. “Both businesses will be able to strengthen their respective product portfolios, benefiting from an increased power of innovation as well as more competitive and cost-efficient offerings.”
Eaton had sales of $21.6 billion in 2018.
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