Kentucky Danfoss facility to be sold
By Michael Degan, Fluid Power Journal Editor
The European Union’s antitrust enforcer has approved Danfoss’s proposed $3.3 billion acquisition of Eaton’s hydraulics business.
The European Commission, an arm of the EU, began an investigation of the merger last September and issued its findings on March 18, according to an EU announcement. The commission was concerned that the acquisition could lead to less market competition and higher prices for customers.
The commission cited concerns about the market for specific products, including hydraulic steering units, electrohydraulic steering valves, and orbital motors.
To gain the commission’s approval for the acquisition, Danfoss agreed to sell its plants in Wroclaw, Poland; Parchim, Germany; and Hopkinsville, Kentucky, where the company makes the products. Eaton’s production of some of the products will transfer to the Hopkinsville plant to later be sold off. Danfoss also committed to technology transfers for hydraulic steering units.
The commission approved the acquisition conditional on compliance with the agreements from Danfoss and Eaton.
“Today’s decision follows an in-depth investigation of the proposed acquisition which combines the activities of Danfoss and Eaton Hydraulics,” the announcement said. “Danfoss and Eaton Hydraulics are both leading global manufacturers of hydraulic components used to make hydraulic systems for various kinds of machinery. . . . The proposed transaction would remove one of the main competitors in this market.”
The announcement said the merger could “have harmed competition, due to the combination of both companies’ hydraulic components businesses for mobile machinery.” The merger “would lead to a reduced choice in suppliers, as well as higher prices, for certain hydraulic components,” according to the announcement. “The market investigation also suggested that customers faced strong difficulties in switching suppliers.”
“The commitments offered by Danfoss fully address the competition concerns raised by the proposed transaction,” the commission said in the announcement.
Danfoss Power Solutions is headquartered in Denmark and manufactures components and engineering technologies for refrigeration, air conditioning, heating, motor control, and hydraulics used in off-road machinery. The company has 28 manufacturing and engineering facilities worldwide.
Eaton, headquartered in Ireland, is active in power management for electrical, hydraulics, aerospace, and vehicle applications. Eaton Hydraulics manufactures and sells hydraulic components and systems for industrial and mobile equipment.