Eaton to sell Vehicle Switch/Electronics Division.
CLEVELAND, OHIO…Eaton Corporation (NYSE:ETN) today said it will pursue the sale of its $330 million worldwide Vehicle Switch/Electronics Division (VS/ED) because it has concluded that the business no longer fits the company's longer-term strategic objectives. The company has retained Morgan Stanley Dean Witter, an investment banking firm, to assist in the sale, and said it anticipates that a transaction will be completed by the end of year 2000. Eaton said it has no immediate plans for the use of proceeds from the sale.
Alexander M. Cutler, Eaton Chairman and Chief Executive Officer, said, "This decision was a difficult, but necessary one for us. VS/ED is a profitable business with an excellent workforce and has a leading position in ergonomic switch modules, which are primarily used in vehicle interiors. However, the vehicle interior segment is rapidly consolidating in response to the industry-wide move toward integrated cockpit systems solutions. We have decided to concentrate our resources on automotive applications and subsystems where we have greater growth prospects because, as a niche product player, we are not in a position to lead this consolidation.
The balance of the Automotive Group is largely focused on the powertrain and specialized sensor and actuator areas, where we have significant, synergistic growth programs based on our strong market presence and technological strength," he said. Cutler cited a number of examples:
breakout performance of the company’s engine supercharger business development of a complete cylinder head module business based on the company's leadership in valvetrain components and key strategic alliances and joint ventures
introduction of electronically controlled differentials breakout growth in transmission control modules, which is supported by a recently signed strategic alliance with Motorola, Inc.
significant growth in motor actuators for mirror, HVAC, engine management and other applications.
The company said it believes the VS/ED business will be an attractive acquisition for automotive interiors and electronics suppliers because VS/ED:
has the most balanced portfolio of global operations of its type now in the marketplace, with world-class processes and facilities, has an excellent global engineering presence, is an industry leader in mechatronics, possesses low-cost global manufacturing operations, and, has demonstrated strong growth and profitability.
Today's announcement does not affect the balance of the company's Automotive Group.
VS/ED, which is headquartered in Downers Grove, Illinois, has 4,017 employees at 8 primary facilities in North America, South America and Europe. The division manufactures a wide range of electro-mechanical and mechatronic controls, including column switches; control modules for windows, doors and other customer courtesy uses; electronic controllers; instrument panel and console switches; lighting centers; transmission switches; and security, under-the-hood and door jamb switches. VS/ED sells to virtually every major auto manufacturer in North America, South America and Europe.
With 1999 sales of $8.4 billion, Eaton is a diversified industrial manufacturer that serves industrial, vehicle, construction, commercial and aerospace and semiconductor markets. Principle products include hydraulic products and fluid connectors, electrical power distribution and control equipment, truck drivetrain systems, engine components, ion implanters and a wide variety of controls. The company has 64,000 employees and 200 manufacturing sites in 24 countries.
Editor's Note: A complete listing of facilities by location and number of employees affected by this announcement follows: Facility Location Number of Employees (As of 7/31/00) Matamoros, Mexico (2 facilities) 2,121 Barcelona, Spain 372 Downers Grove, Illinois 165 Gdansk, Poland 375 Illkirch, France 76 Langenlonsheim, Germany 828 Sao Jose dos Campos, Brazil 80 Total 4,017