Eaton’s Rush to Divest Could Shave Bucks off Price for Unit

Eaton Corp. announced recently it would put its vehicle switch/electronics division on the auction block. The company said it wants to unload the non-core, non-growth business before year-end, but at least one analyst thinks that a quick sale will limit the price Eaton could otherwise secure. The Downers Grove, Ill.-based business, which manufactures interior switches such as window, door-lock and lighting controls, will post around $330 million in sales for 2000, and is estimated to have around 6% to 10% operating margins. The unit has manufacturing facilities in seven countries in Europe, North and South America and the majority of its 4,000-plus employees are located in Mexico. The U.S. automotive components sector does about $2 billion in sales annually. The $4.8 billion market cap company said it is selling because the industry is moving to an integrated cockpit systems model, and Eaton is not in a position to lead that consolidation. Eaton has retained Morgan Stanley Dean Witter to advise on the divestiture.