Date: December 28, 2006
Eaton Expands Its Aerospace Platform With The Acquisition Of Argo-Tech
CLEVELAND … Diversified industrial manufacturer Eaton Corporation (NYSE:ETN) announced today it has reached an agreement to purchase AT Holdings Corporation, the parent of Argo-Tech Corporation for $695 million. The transaction, expected to close in the first quarter of 2007, is subject to regulatory approvals and other customary closing conditions.
Argo-Tech’s aerospace business, which had sales for the fiscal year ended October 28, 2006, of $206 million and EBITDA of $63 million, is a leader in high performance aerospace engine fuel pumps and systems, airframe fuel pumps and systems, and ground fueling systems for commercial and military aerospace markets. The company employs about 640 people in four locations – Cleveland, Ohio; Costa Mesa and Inglewood, Calif.; and Tucson, Ariz. Prior to the closing, AT Holdings will be reorganized to exclude its cryogenics and other non-aerospace businesses, which had sales of $22 million in 2006, and certain other assets from the transaction.
"The acquisition of Argo-Tech adds an important component to Eaton’s aerospace fuel system strategy by acquiring a leading provider in engine fuel pump technology,” said Alexander M. Cutler, Eaton chairman and chief executive officer. “Argo-Tech will strengthen our aerospace operations by providing Eaton with a total fuel system capability, attractive aftermarket opportunities and an increased portfolio and customer base."
In 2005, Eaton made its first move into fuel systems with the acquisition of Cobham Aerospace’s Fluid and Air Division. The acquisition of Argo-Tech moves Eaton into high-pressure engine fuel systems. The combination of airframe and engine fuel systems capability provided by these acquisitions brings a complete tank-to-exhaust-systems solution for both airframe and engine manufacturers.
Argo-Tech strengthens Eaton’s major commercial and military aerospace platform content and significantly increases Eaton’s aftermarket opportunities. With more than 100,000 fuel pumps in over 60 percent of large commercial aircraft in service today, Argo-Tech services a significant repair and overhaul demand as a commercial aircraft will typically experience five to six main engine fuel pump overhauls over its 30-year life span. Argo-Tech is also well positioned for the next generation of commercial aircraft and very light jets. The company is the sole source supplier of the main engine fuel pump for the General Electric GEnx engines to be used on the Boeing 787, Airbus A350 and the Boeing 747-8, and the company is the fuel system supplier for the Eclipse 500 and Adams 700. With this acquisition, Eaton’s aerospace operations will grow to approximately $1.5 billion in annual revenues.
“Our aerospace business is a global leader for the design, manufacture and service of fluid and electromechanical systems and components,” said Craig Arnold, Eaton senior vice president and president – Fluid Power Group. “The combination of our aerospace businesses supports Eaton's goal of supplying customers with complete fluid systems.”
Eaton Corporation is a diversified industrial manufacturer with 2005 sales of $11.1 billion. Eaton is a global leader in electrical systems and components for power quality, distribution and control; fluid power systems and services for industrial, mobile and aircraft equipment; intelligent truck drivetrain systems for safety and fuel economy; and automotive engine air management systems, powertrain solutions and specialty controls for performance, fuel economy and safety. Eaton has 60,000 employees and sells products to customers in more than 125 countries.
This news release contains a forward-looking statement concerning the company's aerospace operations. This statement should be used with caution and is 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 statement: unanticipated changes in the markets for the aerospace business; unanticipated downturns in business relationships with customers or their purchases from us; competitive pressures on sales and pricing; increases in the cost of material, energy 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; the impact of acquisitions, divestitures, and joint ventures; new laws and governmental regulations; interest rate changes; 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.