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Eaton has agreed to sell its hydraulics business to Danfoss A/S, a Danish industrial company, for $3.3 billion in cash. This represents a 13.2 multiple of 2019 EBITDA.

Eaton’s hydraulics business, which accounted for 86 percent of Eaton’s hydraulics segment revenue in 2019, is considered a global leader in hydraulics components, systems, and services for industrial and mobile equipment. The business had sales of $2.2 billion in 2019 and employs approximately 11,000 people.

Eaton is retaining the filtration and golf grip businesses currently reported in the company’s hydraulics segment.

“Today’s announcement is part of the ongoing transformation of Eaton into a higher growth company with better earnings consistency,” Eaton Chairman and CEO Craig Arnold said in a statement. “We believe this transaction will create substantial value for our shareholders and allow our hydraulics employees to be part of a company that has a strong commitment to the hydraulics industry.”

Danfoss President and CEO Kim Fausing added: “Eaton Hydraulics is a highly respected player in the global hydraulics industry, recognized for its dedicated people and strong brands. By combining the knowledge and experience of these two companies, our customers will benefit from unmatched expertise from a single partner.”

The transaction is subject to customary closing conditions and regulatory approvals and is expected to close by the end of the year.

More information on the transaction will be provided during Eaton’s quarterly conference call on Feb. 4, 2020, at 11 a.m. Eastern time. Eaton is a power management company with 2018 sales of $21.6 billion.