Parker takes over Intertech in $5bn mega-merger
Parker Hannifin, the world`s largest hydraulic equipment manufacturer, is taking over another long-established US hydraulics business, Commercial Intertech, for $473m in cash, shares and assumed debt.
Together, the companies will employ more than 40,000 and form a $5bn global giant. Parker says that the two businesses are complementary, with little overlap in their activities. Parker is strong in the industrial sector; CI focuses on mobile hydraulics.
"We are an excellent fit strategically and culturally," Parker`s chairman and chief executive Duane Collins said at last month`s announcement.
"Commercial Intertech is our kind of company: built by resourceful people who work hard and manage prudently, and known for producing first-rate products and pioneering technology."
Paul Powers, Collins` counterpart at CI, said that the deal would have benefits for shareholders, employees and customers. "This combination is a `win-win` transaction for every stakeholder," he declared.
Although Parker is portraying the deal as a merger, it dominates the partnership. Parker`s sales last year amounted to more than $4.9bn, compared to Commercial Intertech`s $535m. Parker employs more than 38,000 people working at 352 sites in 39 countries; CI employs fewer than 4,000 at 27 sites in seven countries.
The UK is Parker`s European headquarters and the company employs more than 1,800 people here at 17 sites including Watford, Ossett and Hemel Hempstead. CI operates as Commercial Hydraulics in the UK and has three manufacturing sites - at Grantham, Cheltenham and its Warwick headquarters.
Some job losses are expected as a result of the takeover, but details are still being worked out. The two companies` European operations are expected to be "rationalised". Parker says that the merger is in line with its strategy of offering "the most complete range of motion control systems".
The deal will offer customers a "one-stop shop" for their motion needs, it adds. For example, refuse truck manufacturers will be able to buy a package including hydraulic telescoping cylinders, gear pumps, control valves, fluid connectors, filters and seals, all from one source.
CI`s hydraulics business will be integrated into Parker`s hydraulics group. CI`s metal-forming and building systems operations will be run separately. The merger is expected to be completed in the second quarter of this year.