Danfoss to sell new unit, close on purchase of Eaton's hydraulics business

HOPKINSVILLE, KY.—Danfoss Power Solutions is selling off a portion of its existing business to help win regulatory approval for the purchase of Eaton Corp.'s hydraulics business.

Danfoss A/S revealed plans to buy Eaton Hydraulics for $3.3 billion in 2020, a move the company calls transformative.

To obtain regulatory approval from both the U.S. Department of Justice and the European Commission, the company created a new business unit called White Drive Motors & Steering with plans to sell those operations.

"White Drive Motors & Steering has a competitive and comprehensive portfolio of orbital motor and steering products, as well as the required market share coverage to play a significant role in the mobile hydraulics industry," the company said.

Included in the new business created in February are Danfoss plants in Hopkinsville and Wroclaw, Poland, and Parchim, Germany.

The to-be-sold division takes its name from a 2016 acquisition by Danfoss of White Drive Products Inc., a maker of hydraulic motors in Hopkinsville.

Once the Eaton deal closes, the White business also will include two product lines from Eaton Hydraulics in Shawnee, Okla., and one in Eden Prairie Minn., the company said. The product lines as well as some equipment from Eaton's plant in Searcy, Ark., will be moved from those sites. The changes will involve about 800 employees.

"We are committed to finding a good home for the new stand-alone business and we will work closely with the new owner to ensure a smooth transition for all employees, customers and distribution partners," Eric Alstroem, Danfoss Power Solutions president, said in a statement.

"The Eaton Hydraulics acquisition is a major game changer for Danfoss. We will unite two of the key global players in hydraulics, creating the broadest offering of products, huge innovation power, robust distribution channels and tremendous geographic reach. We now look forward to completing the process with the authorities and receiving these necessary regulatory approvals," he said.

Eaton's $2.2 billion hydraulics business has about 11,000 employees and includes a wide variety of equipment and systems to serve a vast array of industrial and mobile applications.

While there are many components to hydraulic systems, rubber hoses are key in helping hydraulics do their job, whatever that job might be. Those hoses must withstand high pressures that allow hydraulic fluids to create equipment movement. Other aspects of hydraulics include pumps, motors, valves, controls and cylinders.

Danfoss has said the deal allows the company to dramatically grow both in terms of sales and world geography.

While Eaton is selling off the hydraulics business, the company is keeping a rubber-related unit that has been housed in that segment—golf grips. Eaton also is keeping a filtration business that was part of the unit.

The hydraulics business being sold to Danfoss represents about 10 percent of Eaton's overall sales.