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Phoenixtec shares up on acquisition offer from Eaton

Phoenixtec Power Co (飛瑞), Taiwan's largest power-supply systems maker, surged after Eaton Corp, the world's second-largest maker of hydraulic equipment, agreed to buy the Taipei-based company for US$565 million.

Phoenixtec rose NT$2.20, the daily 7 percent maximum, to NT$34.10 (US$1.05) in Taipei yesterday, as the benchmark TAIEX gained 1.1 percent. Cleveland-based Eaton said on Thursday it would pay US$565 million, or US$1.54 a share, for Phoenixtec, 60 percent more than the closing price a day earlier.

Phoenixtec, which expects sales this year of US$495 million, makes backup power supply systems sold mainly in China, Southeast Asia and eastern Europe. It employs 5,800 workers and has factories in Taiwan and China. Managers holding 25 percent of the stock have accepted the offer.

"Phoenixtec will get permanent orders and shareholders will benefit from the premium, and Eaton can enter the China market," said Michael On (洪瑞泰), who looks after the equivalent of US$100 million as managing director of Beyond Asset Management Co in Taipei.

The deal is one of two acquisitions Eaton announced on Thursday. Eaton will buy both Phoenixtec and Moeller Group of Germany for about US$2.8 billion as US sales growth slows. Eaton rose the most yesterday since August in New York trading.

The purchases will push Eaton's international sales higher than 50 percent for the first time, adding electrical control systems for buildings in fast-growing economies in eastern Europe and China.

Eaton chief executive officer Alexander Cutler has boosted overseas sales 31 percent from last year because of lower US demand for heavy-duty truck parts and electrical and hydraulic equipment.
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