Does it make sense strategically for CEO Craig Arnold to sell the hydraulics business?

Is $3.3 billion a fair price for it?

NOTE: You are expected to provide a quantitative foundation for your answer regarding the price.

Source: Federal Reserve Board, Report H15 Selected Interest Rates, FRED Economic Data, Federal Reserve Bank of St. Louis, Accessed 7/14/20. Debt betas are from "Capital Structure and Systematic Risk," by M. Schwert and I. Strebulaev, Appendix Table A1, Stanford Graduate School of Business, working paper, 4/6/14. 221-006 Eaton Corporation: Portfolio Transformation and The Cost of Capital Eaton, by S. Volkmann et al., 12/23/19. Both reports were available on Thomson One, accessed 8/17/20. Eaton Corporation: Portfolio Transformation and The Cost of Capital 221-006 Exhibit 3 Eaton Corporation Segment Financials in 2019; Excludes Corporate Expenses (\$ in millions) Source: Casewriter analysis, Eaton 2019 Annual Report pp. 69-70. Note: The Hydraulics Segment included two other business units (Filtration and Golf Grips) which accounted for 14% of the segment's sales. Exhibit 4 Danfoss Corporation and Segment Financials in 2019 (millions of Euros and US Dollars) Exhibit 8A Financial Data on Firms that Manufacture or Purchase Hydraulic Equipment Exhibit 2 Eaton Corporation Balance Sheet, 2018 and 2019 (in millions) Fvhihit 1 Faton Cornoration Innoma Ctatamant 918 and 910 (in millions) Source: Federal Reserve Board, Report H15 Selected Interest Rates, FRED Economic Data, Federal Reserve Bank of St. Louis, Accessed 7/14/20. Debt betas are from "Capital Structure and Systematic Risk," by M. Schwert and I. Strebulaev, Appendix Table A1, Stanford Graduate School of Business, working paper, 4/6/14. 221-006 Eaton Corporation: Portfolio Transformation and The Cost of Capital Eaton, by S. Volkmann et al., 12/23/19. Both reports were available on Thomson One, accessed 8/17/20. Eaton Corporation: Portfolio Transformation and The Cost of Capital 221-006 Exhibit 3 Eaton Corporation Segment Financials in 2019; Excludes Corporate Expenses (\$ in millions) Source: Casewriter analysis, Eaton 2019 Annual Report pp. 69-70. Note: The Hydraulics Segment included two other business units (Filtration and Golf Grips) which accounted for 14% of the segment's sales. Exhibit 4 Danfoss Corporation and Segment Financials in 2019 (millions of Euros and US Dollars) Exhibit 8A Financial Data on Firms that Manufacture or Purchase Hydraulic Equipment Exhibit 2 Eaton Corporation Balance Sheet, 2018 and 2019 (in millions) Fvhihit 1 Faton Cornoration Innoma Ctatamant 918 and 910 (in millions)