Eaton Acquires Royal Power Solutions

Rhea-AI Summary

Eaton (NYSE:ETN) has finalized its acquisition of Royal Power Solutions for $600 million, approximately 13.6 times the company’s estimated 2022 EBITDA. This strategic move positions Eaton to leverage electrification trends in high-growth markets, enhancing its capabilities in eMobility and energy management sectors. Royal Power Solutions employs around 450 staff and operates facilities in Illinois and Mexico. This acquisition aims to bolster Eaton's growth in mobility and electrical businesses, reflecting its commitment to power management solutions.

Positive

• Acquisition of Royal Power Solutions expands Eaton's capabilities in electrification and eMobility.
• Strategic positioning to capitalize on high-growth markets, potentially driving future revenue growth.
• Integration of Royal Power Solutions' approximately 450 employees and facilities enhances operational strength.

Negative

• Acquisition cost of $600 million may strain Eaton's financial resources.
• Risks associated with integrating Royal Power Solutions into Eaton's existing operations.

• Portfolio addition positions Eaton to capitalize on electrification trends across multiple high-growth markets

DUBLIN--(BUSINESS WIRE)-- Power management company Eaton (NYSE:ETN) today announced it has completed the acquisition of Royal Power Solutions, a U.S.-based manufacturer of high-precision electrical connectivity components used in electric vehicle, energy management, industrial and mobility markets. Under the terms of the agreement, Eaton paid $600 million for Royal Power Solutions, which represents approximately 13.6 times the company’s estimated 2022 EBITDA.

“Growth opportunities tied to the electrification of our economy are accelerating, and Eaton is fully participating through our mobility and electrical businesses,” said Heath Monesmith, president and chief operating officer, Industrial Sector, Eaton. “And the addition of Royal Power Solutions enhances our ability to capitalize on this secular growth trend across our eMobility, aerospace and electrical businesses. We are excited to welcome Royal Power Solutions to Eaton.”

Royal Power Solutions has approximately 450 employees and manufacturing facilities in Carol Stream, Illinois, and Queretaro, Mexico, along with a sales and engineering office in Canton, Michigan.

Eaton’s mission is to improve the quality of life and the environment through the use of power management technologies and services. We provide sustainable solutions that help our customers effectively manage electrical, hydraulic, and mechanical power – more safely, more efficiently, and more reliably. Eaton’s 2020 revenues were $17.9 billion, and we sell products to customers in more than 175 countries. We have approximately 85,000 employees. For more information, visit www.eaton.com.

This news release contains forward-looking statements concerning estimated 2022 EBITDA for Royal Power Solutions. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside the company’s control. The following factors could cause actual results to differ materially from those in the forward-looking statements: the course of the COVID-19 pandemic globally and government actions related thereto; continued global supply chain disruptions, unanticipated changes in Royal Power Solutions’ markets; unanticipated downturns in business relationships with customers or their purchases from them; competitive pressures on sales and pricing; unanticipated changes in the cost or availability of material and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims, charges, litigation or dispute resolutions; strikes or other labor unrest; natural disasters; unanticipated difficulties completing or integrating acquisitions; new laws and governmental regulations; interest rate changes; changes in tax laws or tax regulations; currency fluctuations; and unanticipated deterioration of economic and financial conditions in the United States and around the world. We do not assume any obligation to update these forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220105005989/en/

Jennifer Tolhurst, +1 (440) 523-4006

jennifertolhurst@eaton.com

Source: Eaton

FAQ

What is the value of Eaton's acquisition of Royal Power Solutions?

Eaton's acquisition of Royal Power Solutions is valued at $600 million.

How does the acquisition impact Eaton's business strategy?

The acquisition enhances Eaton's capabilities in electrification and positions the company to capitalize on growth opportunities in the eMobility and energy management sectors.

What are the expected benefits of the Royal Power Solutions acquisition for Eaton?

The acquisition is expected to drive revenue growth by expanding Eaton's market presence and operational capabilities in high-growth sectors.

What are the risks associated with Eaton's acquisition?

Risks include potential integration challenges and the financial strain from the acquisition cost.