Eaton Expands in Aerospace, Will Buy Cobham Mission Systems for $2.8B

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Power management supply giant Eaton has begun 2020 with a bang, announcing two major acquisitions within a four-day stretch.

The Dublin, Ireland-based company said Monday that it has signed an agreement to acquire Cobham Mission Systems (CMS), a major supplier of air-to-air refueling systems, environmental systems and actuation primarily for defense markets. Eaton will pay $2.83 billion for CMS, which includes $130 million in tax benefits. That cost represents about 14 times CMS' 2020 EBITDA and 13 times its estimated 2021 EBITDA.

“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 future growth,” said Heath Monesmith, president and chief operating officer, Industrial Sector, Eaton. “We look forward to welcoming CMS to Eaton.”

The acquisition, which is subject to customary closing conditions, is expected to close in the second half of 2021.

The news came just three days after Eaton announced Jan. 29 that it inked a deal to acquire Tripp Lite, a major supplier of power quality products and connectivity solutions, including uninterruptible power supply systems, rack power distribution units, surge protectors and enclosures for data centers, industrial, medical and communications markets. Eaton will pay $1.65 billion for Chicago-based Tripp Lite, representing about 12 times Tripp Lite's 2020 EBITDA and 11 times its estimated 2021 EBITDA.

The Tripp Lite deal is expected to close mid-2021.

Eaton reported its 2020 fourth quarter and full-year financial results on Tuesday. It shared that Q4 sales were $4.7 billion, with organic sales down 5 percent year-over-year as the company's recent divestments of its Lighting and Automotive Fluid Conveyance businesses reduced sales by 8 percent, partially offset by 2 percent growth from acquisitions. Q4 segment margins were 17.4 percent.

For the full year, 2020 total sales were $17.9 billion, with organic sales down 11 percent from 2019. Segment margins were 16.4 percent.

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