Eaton to Sell Hydraulics Business to Danfoss ASJanuary 30, 2020 by Sophia Valente
Last week, power management company Eaton Corp announced the sale of its hydraulics business to Danish engineering solutions company, Danfoss AS.
The announcement reaffirms Danfoss A/S shift in core business.
Merge Represents Overall Company Shift to Hydraulics for Danfoss
The $3.3 billion acquisition represents 86% of Eaton’s Hydraulics segment revenue, with sales of $2.2 billion in 2019. However, not every component of the Hydraulics business was included in the sale. Eaton will continue to maintain it’s filtration sector; their line of Hydraulic lubrication filters and internormen filter elements will continue to supply Eaton’s power generation, agriculture, construction, and material handling markets.
Golf Pride, their line of slip-on golf grips, is also currently reported under the company’s Hydraulics segment- it will be retained by Eaton following the sale. Eaton is currently the world’s largest manufacturer of golf club grips.
Danfoss, a considerably smaller company with a focus on energy-efficient home infrastructure, will increase both its total labor force and sales by about a third. 11,000 Eaton Hydraulics employees will join Danfoss’s 28,000 employees- the sale will also double their Hydraulics business.
Eaton CEO Craig Arnold and Danfoss CEO Kim Fausing
In a post-sale statement, Danfoss Power Solutions president, Eric Alstrom, implied that this merge represents an overall company shift towards hydraulics, stating “Hydraulics is our core...I believe our customers will benefit from combining these two businesses into a full-line hydraulics player dedicated to innovation and with a broad offering of products.”
The company’s current applications of their preexisting hydraulics line include agriculture, construction, road building, machinery, material handling, wheel loaders, and forestry.
Danfoss boasts a “total systems approach” to their work function Hydraulics market, with a strong emphasis on precise work function control geared toward fast development time and precision. In their agricultural market, their steering systems, gear pumps, gear motors, and PLUS +1 displays focus on high productivity margins and energy-efficient cooling.
Eaton’s extensive array of mobile valves that are “engineered for superior control, better response, and operator efficiency” should be a substantial compliment to Danfoss’ pre-existing applications.
Danfoss Enhances Steering Portfolio with Hydraulics Sale
In addition, Danfoss stands to inherit Eaton’s “industry-leading portfolio” of steering control units, enhancing their already-expanding steering portfolio; in December 2018, they announced the acquisition of Hydraulik Nord Fluidtechnik, a German hydraulic steering supplier.
The Danfoss JS1-H Joystick with PLUS+1 compliance, a prominent product in the company’s current steering technology line-up. Image used courtesy of Danfoss.
Eaton’s Ongoing Transformation
In a statement from Eaton, CEO Craig Arnold shared that the business decision was tied to “the ongoing transformation of Eaton into a higher growth company with better earnings consistency.” Eaton has made multiple changes to its operating that indicate a shift in its business operations. In December, they announced the purchase of the Souriau-Sunbank Connection Technologies business, and earlier in January, they publicized the sale of their Automotive Fluid Conveyance Division. The deviation from individualized power management to connective technologies fit for aerospace applications indicates a new direction for Eaton further emphasized by the sale of its Hydraulics business.
Eaton will be hosting its quarterly conference call on February 4th at 11 am ET, where they will provide more information on the acquisition and what potential it holds for hydraulics. What potential do you think this has on hydraulics and the future of technology coming from these companies?