WASHINGTON, D.C. and ST. LOUIS, Mo. -- Danaher Corp. and Cooper Industries have signed an agreement to combine certain operations of their respective tool manufacturing businesses in a joint venture that the two companies say will create a “premier global business with leading brands, greater scale and a more diversified product portfolio.”

Danaher and Cooper expect the combination to generate significant cost and revenue synergies primarily from increased purchasing leverage, geographical and channel footprint expansion, cross-branding initiatives and other consolidation opportunities. The 2009 sales of the two tools businesses on a combined, non-GAAP basis were approximately $1.2 billion. As a result of the transaction, the new company is expected to make a dividend payment of $90 million to Danaher. Cooper and Danaher will each have a 50 percent voting interest in the joint venture and an equal number of representatives on its board of directors. The partners will deconsolidate the financial results of their respective tools businesses and record the financial results based on the equity method of accounting.

"Size and scale are important in this industry and this combination will create a focused, global tools business with revenues in excess of $1.2 billion and significant sales in North America, South America, Europe, China and Australia, a global manufacturing footprint, a more comprehensive product offering and a significantly improved cost position, all of which will enhance its global competitive position and ability to grow," said Cooper Industries Chairman and Chief Executive Officer Kirk Hachigian. "We expect this joint venture to deliver long-term value creation to our shareholders, customers and employees as we are confident that its management team will successfully capitalize on the synergies that are inherent in combining these two businesses, creating significant opportunities for future growth and expansion going forward. Cooper will focus on growing our core electrical products business by executing on our organic growth initiatives of customer loyalty, innovation and globalization and utilizing our exceptionally strong balance sheet for strategic acquisitions."

Steve Breitzka, president of Danaher Tool Group, will lead the joint venture as CEO.

Danaher’s President and CEO H. Lawrence Culp Jr., said, “The creation of this new business combines the strengths of two great companies to create a comprehensive product offering across all major tool categories. The experience of the combined management team, and the highly complementary nature of the products, operations and geographic footprint make this a compelling combination that we believe will benefit our customers and employees.”

The transaction, subject to customary closing conditions, including obtaining regulatory approvals, and is expected to close in the second quarter of 2010.