Eaton reaches definitive agreements with Dana Corporation to purchase clutch business, sell axle and brake operations
CLEVELAND, OH....Eaton Corporation (NYSE:ETN) today announced the signing of definitive agreements whereby Eaton will purchase Dana Corporation's (NYSE:DCN) worldwide clutch business for $180 million, and Dana will purchase Eaton's worldwide axle and brake business, including Eaton's forging operation in Marion, Ohio, for $287 million. The transactions are for cash, and the agreements are subject to the due diligence process and normal governmental approvals.
In addition to the sale of the two businesses, the companies also signed a long-term agreement whereby Eaton will exclusively represent, on a global basis, a complete range of heavy duty (class 8) drivetrain products to North American original equipment manufacturers. Dana will continue to manufacture and market a complete line of medium duty axle and brake products worldwide. Eaton will also retain intellectual property rights for current class 8 drive axle products for two years and will continue to support research and development projects during that period. The transmission businesses of the two companies are not affected by today's announcement.
Eaton's worldwide Axle and Brake Operations, which has 3,400 employees at nine facilities, in five countries, has sales of more than $600 million. Dana's clutch business, which had sales of about $200 million, consists of 675 employees at nine locations in five countries.
Stephen R. Hardis, Eaton Chairman and Chief Executive Officer, said, "We view this transaction as one of the most strategic repositioning moves made by the company in its recent history, and a reflection of our commitment to the trucking industry.
"Increasingly, our customers are demanding system solutions from their suppliers, and these agreements give us the ability to meet these demands," Hardis said. "The addition of the Spicer clutch business to our market-leading medium- and heavy-duty Eaton Fuller transmissions, and the marketing rights for axles, brakes and driveshafts, permit Eaton to better respond to the demand for enhanced drivetrain solutions by our customers. The efficiencies resulting from these agreements, combined with global clutch opportunities, provide Eaton with a solid presence in the marketplace from which to grow."
"A superior truck axle was the founding product for our company, and the decision to sell this business was a difficult one for us. We have, at every level of this business, an outstanding and dedicated workforce, and we deeply appreciate their efforts in maintaining a tradition of product excellence. We believe, however, that this decision is the right one, and will benefit all parties involved. Dana's workplace culture, which includes a widely recognized commitment to product quality and a concern for employee well-being, will ensure a smooth transition as these businesses move forward," Hardis said.
Founded in 1938, Dana's Spicer Clutch Division is an industry leader in the development of medium- and heavy-duty truck clutches and vibration dampers.
Eaton Corporation, headquartered in Cleveland, Ohio, is a global manufacturer of highly engineered products which serve industrial, vehicle, construction, commercial and aerospace markets. Principal products include electrical power distribution and control equipment, engine components, hydraulic products, ion implanters and a wide variety of controls. The company is a leader in the design, manufacture, and distribution of truck drivetrain components for medium-duty and heavy-duty commercial trucks worldwide. Eaton has 54,000 employees and 155 manufacturing sites in 26 countries around the world. Sales for 1996 were $7 billion.
Dana Corporation is a global leader in the engineering, manufacture and distribution of products and systems for the vehicular, industrial, and off-highway markets. Based in Toledo, Ohio, Dana operates facilities in 30 countries with more than 48,000 people. Its 1996 sales were $7.7 billion.
A complete listing of facilities and number of employees affected by today's announcement follows:
Eaton Corporation's Worldwide Axle and Brake Operations
Facility Glasgow, Kentucky Humboldt, Tennessee Henderson, Kentucky Axle and Brake Headquarters, Galesburg, Michigan Toluca, Mexico Buenos Aires, Argentina Pamplona, Spain Cramlington, England Forge Division Facility, Marion, Ohio Number of Employees As of July 1, 1997 706 277 456 136 489 471 518 49 317 TOTAL EMPLOYEES 3,419 Dana Corporation's Spicer Clutch Division Worldwide Facility Auburn, Indiana Auburn, Indiana laboratory Oklahoma City, Oklahoma Charlotte, North Carolina Gravatai, Brazil Brackley, England Tipton, England Hoevelaken, Holland Hallam, Australia Number of Employees As of July 1, 1997 436 10 48 41 30 34 33 31 13 TOTAL EMPLOYEES 676