Cooper Industries, Houston, and Danaher Corp., Washington, D.C., have signed an agreement to combine certain operations of their respective tools manufacturing businesses in a joint venture to create a global business with leading brands, greater scale and a more diversified product portfolio.
Cooper and Danaher each will own a 50-percent share of the new company and will have equal representation on the joint venture's board. The 2009 sales of the two tools businesses on a combined, non-GAAP basis were approximately $1.2 billion. The two companies will deconsolidate the financial results of their respective tools businesses and record the financial results as equity investments. As a result of the transaction, the new company is expected to make a dividend payment of $90 million to Danaher. Steve Breitzka, president of Danaher Tool Group, will lead the joint venture as CEO.
The venture will combine complementary tools businesses with well-known brands, experienced management teams and global customer bases. Cooper's portfolio of power tools, wireless technologies and hand tools will join with Danaher's mechanic's hand tools business to create a comprehensive offering across many tool categories with little product line overlap, the companies said.
Danaher and Cooper expect the combination to generate significant cost and revenue synergies, primarily from increased purchasing leverage, geographical and channel footprint expansion, cross-branding initiatives and other consolidation opportunities.
Cooper intends to use the opportunity to focus on growing its core electrical products business, said Kirk Hachigian, Cooper Industries' chairman and CEO. “Size and scale are important in this industry and this combination will create a focused, global tools business with revenues in excess of $1.2 billion and significant sales in North America, South America, Europe, China, and Australia, a global manufacturing footprint, a more comprehensive product offering and a significantly improved cost position, all of which will enhance its global competitive position and ability to grow,” said Hachigian.
Among the brands in Cooper Tools' stable are Crescent wrenches, H.K. Porter cable cutters, Erem pliers, Wiss snips and scissors, Lufkin tape measures, Nicholson files, Plumb hammers and Weller soldering products, as well as an array of brands in industrial-grade power tools including Cieco, Dotco, Quackenbush, Gardner Denver and Metronix. Danaher's mechanics' hand tools lines include the Allen, Armstrong, GearWrench, K-D, Matco and Spline brands.