Navigant Research Blog

Eaton-Cooper Deal Marks Maturation of Smart Energy

Bob Gohn — May 23, 2012

The steady waves of consolidation within the smart energy sector produced a major deal this week with Eaton’s planned $11.8 billion acquisition of Cooper Industries, one of the largest to date.  If anyone thinks energy management or the broader clean technology market is fading, think again.

It’s easy to think of both Eaton and Cooper as big old industrial companies, and in many ways they are.  Most commentary on the acquisition has focused on improved brand and global reach, business diversification, and favorable corporate tax treatments in Ireland, which is where the combined company will be headquartered.  This is all true enough.  But one does not need to look far to see the evolution of smart energy as a major underlying rationale for this combination.

Eaton already has been positioning its technology across the power, hydraulics, aerospace, truck, and auto industry segments as an enabler of energy efficiency gains.  As an example, Eaton is already an established leader in commercial and industrial power systems, data centers, and electric vehicle (EV) charging, all key systems associated with smart buildings, green data centers, and EV infrastructure.

Cooper has been focused on similar power management issues, mostly matching up on either end of where Eaton is today.  Cooper is a leading vendor of utility-focused distribution and substation automation technology, expanding the portfolio with acquisitions including Cannon, Cybectec, Cyme, and niche AMI startup Eka Systems.  This theoretically links up well with Eaton’s existing strength in heavy-duty commercial and industrial power distribution capabilities.  At the end-use level, Cooper’s lighting and controls strengthen Eaton’s reach into the smart buildings area, leveraging at least a dozen different Cooper acquisitions in this space over the last eight years.  As is so often claimed in these deals, end-to-end solutions are now possible.

Leaving aside the usual (and substantial) practical integration issues, the acquisition places Eaton in a unique position to drive convergence of smart grid, smart buildings, and smart transportation, with significant links also into the smart energy and smart industry domains.  This corresponds exactly with the overall “smart energy ecosystem” upon which we here at Pike Research are focused.  Though we are fully aware of the challenges facing the smart energy evolution and convergence, we also see clearly the many opportunities.  Eaton now has the chance to join an elite group of companies, including Siemens, GE, and perhaps most closely, Schneider Electric, that have the scale and breadth to address the full waterfront smart energy opportunities.

So just as the cleantech hype of recent years is subsiding, combinations such as this remind us that cleantech is really just growing up, and that as for all the college graduates hitting the streets during this season, the future is really just starting.

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