Filed by Eaton Corporation
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Cooper Industries plc; Eaton Corporation
Filer’s SEC File No.: 1-1396
Date: May 30, 2012
KeyBanc Capital Markets Industrial, Automotive and Transportation Conference
Richard Fearon – Vice Chairman and Chief Financial and Planning Officer May 30, 2012
© 2012 Eaton Corporation. All rights reserved.
The directors of Eaton Corporation accept responsibility for the information contained in this communication. To the best knowledge and belief of the directors of Eaton Corporation (who have taken all reasonable care to ensure such is the case), the information contained in this communication is in accordance with the facts and does not omit anything likely to affect the import of such information.
Persons interested in 1% or more of any relevant securities in Eaton or Cooper may from the date of this communication have disclosure obligations under Rule 8.3 of the Irish Takeover Panel Act, 1997, Takeover Rules 2007 (as amended).
NO OFFER OR SOLICITATION
This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
A registration statement on Form S-4 will be filed that will include the Joint Proxy Statement of Eaton Corporation (“Eaton”) and Cooper Industries plc (“Cooper”) that also constitutes a Prospectus of Eaton Global Corporation Plc (1)(“Eaton Global Plc”). Eaton and Cooper plan to mail to their respective shareholders (and to Cooper Equity Award Holders for information only) the Joint Proxy Statement/Prospectus (including the Scheme) in connection with the transactions.
Investors and shareholders are urged to read the Joint Proxy Statement/Prospectus (including the Scheme) and other relevant documents filed or to be filed with the SEC carefully when they become available because they will contain important information about Eaton, Cooper, Eaton Global Plc, the transactions and related matters. Investors and security holders will be able to obtain free copies of the Joint Proxy Statement/Prospectus (including the Scheme) and other documents filed with the SEC by Eaton Global Plc, Eaton and Cooper through the website maintained by the SEC at www.sec.gov. In addition, investors and shareholders will be able to obtain free copies of the Joint Proxy Statement/Prospectus (including the Scheme) and other documents filed by Eaton and Eaton Global Plc with the SEC by contacting Don Bullock from Eaton by calling (216) 523-5127, and will be able to obtain free copies of the Joint Proxy Statement/Prospectus (including the Scheme) and other documents filed by Cooper by contacting Cooper Investor Relations at c/o Cooper US, Inc., P.O. Box 4446, Houston, Texas 77210 or by calling (713) 209-8400.
PARTICIPANTS IN THE SOLICITATION
Cooper, Eaton and Eaton Global Plc and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the respective shareholders of Cooper and Eaton in respect of the transactions contemplated by the Joint Proxy Statement/Prospectus. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the respective shareholders of Cooper and Eaton in connection with the proposed transactions, including a description of their direct or indirect interests, by security holdings or otherwise, will be set forth in the Joint Proxy Statement/Prospectus when it is filed with the SEC. Information regarding Cooper’s directors and executive officers is contained in Cooper’s Annual Report on Form 10-K for the year ended December 31, 2011 and its Proxy Statement on Schedule 14A, dated March 13, 2012, which are filed with the SEC. Information regarding Eaton’s directors and executive officers is contained in Eaton’s Annual Report on Form 10-K for the year ended December 31, 2011 and its Proxy Statement on Schedule 14A, dated March 16, 2012, which are filed with the SEC.
(1) Expected name, or a variant thereof
© 2012 Eaton Corporation. All rights reserved.
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Forward Looking Statements
This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning Eaton, Eaton Global Plc, the acquisition and other transactions contemplated by the Transaction Agreement, our acquisition financing, our long-term credit rating and our revenues and operating earnings. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Eaton or Eaton Global Plc, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of our control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include adverse regulatory decisions; failure to satisfy other closing conditions with respect to the Acquisition; the risks that the new businesses will not be integrated successfully or that we will not realize estimated cost savings and synergies; our ability to refinance the bridge loan on favorable terms and maintain our current long-term credit rating; unanticipated changes in the markets for our business segments; unanticipated downturns in business relationships with customers or their purchases from Eaton; competitive pressures on our 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; new laws and governmental regulations. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect our business described in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed from time to time with the SEC. We do not assume any obligation to update these forward-looking statements.
No statement in this presentation is intended to constitute a profit forecast for any period, nor should any statements be interpreted to mean that earnings or earnings per share will necessarily be greater or lesser than those for the relevant preceding financial periods for Eaton.
© 2012 Eaton Corporation. All rights reserved.
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Eaton Corporation – A Premier Diversified Power Management Company
A balanced power management company Eaton’s acquisition of Cooper Industries 2012 outlook
© 2012 Eaton Corporation. All rights reserved.
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Eaton provides energy efficient solutions using electrical, mechanical, and fluid technologies
Our products & services deliver reliability, efficiency, and safety for:
Cities & Buildings
Industrial & Machinery
Information Technology
Transportation
Infrastructure
Energy & Utilities
…helping to bridge the gap between rapidly rising demand for energy and naturally constrained sources of supply with sustainable solutions
© 2012 Eaton Corporation. All rights reserved.
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Today we have a global footprint across the five business segments…
2011 Sales by Region
27%
28%
45%
U.S.
International Developed International Emerging
2011 Sales by Business
11%
16%
10%
18%
45%
Electrical Hydraulics Aerospace
Truck Automotive
© 2012 Eaton Corporation. All rights reserved.
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…and our businesses are balanced across the economic cycle
2011 Global Sales by Cycle
100% 80% 60% 40% 20% 0%
14%
23%
29%
34%
2011
No Cycle
$2.2B in Revenues
Electrical Service, Defense, Filtration, Aerospace Aftermarket
Late
$3.6B in Revenues
Commercial Aerospace, Nonresidential Construction, Large Data Centers
Mid
$4.7B in Revenues
Hydraulics, Industrial Controls, Medium Duty Truck, Mid-sized Data Centers
Early
$5.5B in Revenues
Residential Electric, Single Phase Power Quality, Heavy Duty Truck, Automotive
© 2012 Eaton Corporation. All rights reserved.
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EBS embodies the values and processes that bind the company and have enabled our success
A powerful combination of proven foundation elements, tools, and processes, EBS is at the heart of our strategy for being a premier diversified industrial
Growth
Robust strategic planning
process for growth and
profitability
Outgrowing end markets
through innovation
Identifying higher growth markets
Established acquisition strategy
and processes
Profitability
Operational excellence
Global scale
Efficient functional support
Capital Efficiency
Effective working capital
management
Capital expenditures
targeted to support
growth
Foundation
Doing business right
Employee development
Customer focus
Supplier partnerships
© 2012 Eaton Corporation. All rights reserved.
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Executing our strategy has resulted in an upward shift in profitability
Margin (%) Operating
Segment
25% 20% 15% 10% 5% 0%
+ 260 to 310 bps
14.5% -15% 14.2% 12.7% 11.9%
2002-2008 2010 2011 2012E Average
Profitability Drivers
Innovative new products
Leveraging the Eaton Business System Targeted restructuring Margin accretive acquisitions
© 2012 Eaton Corporation. All rights reserved.
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Our shareholder returns have far outpaced the broader market
Cumulative Shareholder Returns
Return Index
500 450 400 350 300 250 200 150 100 50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 May-
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2000 – Mid May 2012 CAGR*
12.0%
6.2%
2.0%
Eaton
S&P 500
PDI Group
Note – PDI Group represents an equal weighted index of DHR, DOV, EMR, GE, ITW, MMM, UTX; *CAGR = Calculated using the End Point Methodology Source Data: Capital IQ
© 2012 Eaton Corporation. All rights reserved.
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Powerful megatrends will help drive our markets to grow at a multiple of global GDP
By the numbers:
Electrical
…Percentage decrease in electricity demand possible 23 through the application of energy efficient equipment and demand management services
Hydraulics
…Percentage increase in agricultural output by 2050 100 necessary in developing countries to feed the global population
Aerospace
30 …Percentage decrease in fuel consumption of next generation single-aisle aircraft planned by 2020
Truck
20 …Percentage decrease in fuel consumption by model year 2018 resulting from the first ever U.S. emissions standards for heavy-duty trucks
Automotive
90 …Percentage increase in proposed Corporate Average Fuel Economy (CAFE) standards by 2025 for passenger cars
Source: United Nations, IATA, NHTSA, Eaton analysis
© 2012 Eaton Corporation. All rights reserved.
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Eaton Corporation – A Premier Diversified Power Management Company
A balanced power management company Eaton’s acquisition of Cooper Industries 2012 outlook
© 2012 Eaton Corporation. All rights reserved.
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Acquisitions have played a large role in growing our electrical business
Market Participation Regional Strength
Electrical Group Acq’d
Year
Acquisitions Sales Power Control Power Lighting & Asia-
Americas EMEA
& Distribution Quality Safety Pacific
Cutler Hammer 1978 $0.6B
Westinghouse DCBU 1994 $1.0 B
Delta Electrical 2003 $0.3 B
Powerware 2004 $0.8 B
MGE Small Systems 2007 $0.2 B
Moeller 2008 $1.5 B
Phoenixtec 2008 $0.5 B
Cooper 2012 $5.4 B
28 other Electrical acquisitions since 1990
© 2012 Eaton Corporation. All rights reserved.
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Transaction overview for Eaton’s acquisition of Cooper Industries
Combined company
Premier power management company with 2011 sales of $21.5B Under the leadership of Eaton management Named Eaton Corporation Plc and will continue to trade on NYSE as ETN Incorporated in Ireland
Consideration
Cooper shareholders will receive $39.15 in cash and 0.77479 ETN Plc shares, reflecting a 29% equity premium to the closing price on May 18 Eaton shareholders will receive 1 ETN Plc share
Financing
Fully committed bridge financing in place
Financial benefits
$375M operating synergies, with >80% realized by year 3, and $160M global cash management and resultant tax benefits in the mature year(1) Significantly accretive to Eaton’s earnings
Timing
Expect closing in the fall of 2012
Conditional on customary regulatory and shareholder approvals
(1) The financial benefits statements have been reported on in accordance with the Irish Takeover Code. Please see the offer announcement dated May 21, 2012 for further details.
© 2012 Eaton Corporation. All rights reserved.
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Cooper has a wide range of complementary electrical businesses
Energy and Safety Solutions ($2.9 B sales)
Cooper Power Systems $1.3 B sales
Market leader in distribution grid protection
Crouse-Hinds $1.0 B sales
Global leader in electrical solutions for harsh and hazardous environments
Safety
$600 M sales
Leading European provider of emergency lighting and video security
Lighting $1.1 B sales
Strong LED platform driving growth
Bussmann: $650 M sales
Global leader in circuit protection
B-Line Support structures $400 M sales
Global provider of structural systems and wire management solutions
Wiring devices $350 M sales
Electrical devices for commercial and residential power distribution
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Adding Cooper expands Eaton’s market participation
Moving Upstream Historic Eaton Core Moving Downstream
Utility power Facilities Load management distribution network Power Distribution & lighting control
© 2012 Eaton Corporation. All rights reserved.
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The strategic rationale for this acquisition is compelling - I
Broad portfolio of complementary products Market segment expansion:
Upstream into power solutions encompassing primary and secondary distribution, grid automation, and smart grid Downstream into lighting, lighting controls, and wiring devices
Expands our solutions with all channels
Well positioned to address long-term global requirements
Aging grid
Increased spending on energy & infrastructure Protecting people, equipment and data
© 2012 Eaton Corporation. All rights reserved.
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The strategic rationale for this acquisition is compelling - II
Aligns with our customer segment focus in oil & gas, mining, energy efficiency and alternative energy
Adds breadth to our global geographic exposure
Attractive business in EMEA
Strong oil & gas industry positioning globally
Complementary component and utility business in APAC
Offers improved cash management flexibility for the corporation
© 2012 Eaton Corporation. All rights reserved.
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Our integrated operating company capabilities (EBS) will drive significant synergies(1)
Synergies
($M) 2013 2014 2015 2016
Pre-tax operating synergies
Sales synergies 10 35 70 115
Cost-out synergies 65 140 240 260
Total operating synergies 75 175 310 375
Global cash management and resultant tax benefits 160 160 160 160
Acquisition integration costs, pre-tax 90 75 35 -
Integration plans
$260M in cost out synergies with over 90% complete by 2015 $200M in acquisition integration charges with ~80% incurred through 2014
(1) The financial benefits statements have been reported on in accordance with the Irish Takeover Code. Please see the offer announcement dated May 21, 2012 for further details.© 2012 Eaton Corporation. All rights reserved.
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The acquisition is accretive to earnings(1)
Accretion
($) 2013 2014 2015 2016
Operating EPS Accretion (1) (0.10) 0.35 0.45 0.55
Cash Operating EPS Accretion (1,2) 0.40 0.65 0.75 0.85
(1) EPS accretion numbers do not represent a profit forecast as defined in the Irish Takeover Code (2) Cash Operating EPS excludes incremental amortization of intangibles arising from purchase accounting
© 2012 Eaton Corporation. All rights reserved.
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Eaton Corporation – A Premier Diversified Power Management Company
A balanced power management company Eaton’s acquisition of Cooper Industries 2012 outlook
© 2012 Eaton Corporation. All rights reserved.
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We project growth of 5% in our markets in 2012…
2012E 2012E
Total U.S. Non
U.S.
Electrical Americas Index 6 7 5
Electrical ROW Index (1) n/a (1)
Hydraulics Index 5 9 2
Aerospace Index 5 3 9
Truck Index 7 16 1
Automotive Index 4 10 2
Eaton Consolidated Index 5% 9% 2%
© 2012 Eaton Corporation. All rights reserved.
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…leading to another year of record margins
2011 2012E 2015 Target
Electrical Americas 14.6% 16.0% 17%
Electrical ROW 9.4% 10.0% 14%
Hydraulics 15.6% 16.0% 17%
Aerospace 14.8% 15.0% 17%
Truck 18.4% 19.0% 20%
Automotive 12.0% 12.0% 13%
Eaton Consolidated 14.2% 14.5% - 15.0% 16% - 17%
© 2012 Eaton Corporation. All rights reserved.
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2012 Guidance
January Guidance February Guidance April Guidance
Market Growth of 5% $800M $800M $800M
Market Outgrowth of 2% $320M $320M $320M
Net Acquisition Revenue $90M $315M $365M
Sales Decrease from FOREX $(550)M $(550)M $(300)M
Incremental Margin 28% 28% 28%
Tax Rate 17% - 19% 17% - 19% 16% - 18%
Full Year $4.15 - $4.55 $4.20 - $4.60 $4.30 - $4.70
Operating EPS
Q2 $1.05 - $1.15
Full Year $4.10 - $4.50 $4.13 - $4.53 $4.23 - $4.63
Fully Diluted EPS
Q2 $1.04 - $1.14
Operating Cash Flow $1.7B to $1.8B $1.7B to $1.8B $1.7B to $1.8B
Free Cash Flow $1.1B to $1.2B $1.1B to $1.2B $1.1B to $1.2B
© 2012 Eaton Corporation. All rights reserved.
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EATON
Powering business worldwide