Power management company Eaton will acquire Tripp Lite, a supplier of power quality products and connectivity solutions for $1.65 billion.

Tripp Lite is into manufacturing single-phase uninterruptible power supply systems, rack power distribution units, surge protectors, and enclosures for data centers, industrial, medical, and communications markets in the Americas.

Founded nearly 100 years ago, the company is headquartered in Chicago, Illinois. As per the terms of the agreement, Eaton will pay $1.65 billion for Tripp Lite, which represents approximately 12 times Tripp Lite’s 2020 EBITDA and 11 times that of its estimated 2021 EBITDA numbers.

“The acquisition of Tripp Lite will enhance the breadth of our edge computing and distributed IT product portfolio and expand our single-phase UPS business,” said Uday Yadav, president and chief operating officer, Electrical Sector, Eaton.

The acquisition, which is subject to customary closing conditions, is expected to close mid-2021, the company said. Eaton’s 2019 revenues were $21.4 billion, and it sells products to customers in more than 175 countries and has approximately 92,000 employees.

This development also needs to be seen in the context of strong annual results posted by the Dublin headquartered company. Eaton’s full year free cash flow was $2.6 billion, which was at the top of guidance range given by the company. Craig Arnold, Eaton chairman and chief executive officer had said: “Our fourth quarter was stronger than expected, with organic sales down 5 per cent, at the high end of our guidance range and up 3 per cent over the third quarter. We are pleased with our solid results, as our businesses have managed through the impact of the COVID-19 pandemic well.”