A US company is aiming to save $160m a year in taxes as it reincorporates in Ireland.
Industrial manufacturer Eaton Corporation has agreed a deal to buy electrical equipment maker Cooper Industries for $11.8 billion in cash and stock.
If the deal is approved, Eaton's shareholders would own 73% of the new company with Cooper shareholders owning the remaining 27%.
Eaton said the deal should generate $535m in annual cost savings by 2016 and add to its earnings by 35 cents per share in 2014 and 45 cents in 2015. It will remain headquartered in Ohio in the US.
Eaton chairman and chief executive Alexander Cutler said that moving the company's incorporation to Ireland will allow the company to handle its assets differently, and will save it $160m a year in taxes.
Cooper makes electrical control equipment, power transmission equipment, switches and other components. Eaton also has a large electrical power transmission division alongside hydraulic and other mechanical components businesses.
When Cooper incorporated in Ireland last decade, it was one of several US industrial companies, including Ingersoll Rand and Tyco International, that picked either Ireland or Switzerland to help lower taxes.
Re-incorporation is a legal move that rarely has any bearing on where a company's headquarters are actually located.
US companies have been reincorporating in Ireland and Switzerland in recent years, instead of the offshore tax havens of Bermuda and the Cayman Islands. They reason that Ireland and Switzerland offer better protection from US tax claims than small countries that are more dependent on US goodwill.
