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Johnson Controls to sell Power Solutions business for $13.2 billion

Johnson Controls says that it has entered into a definitive agreement to sell its Power Solutions business to Brookfield Business Partners L.P. together with institutional partners including Caisse de dépôt et placement du Québec in a cash transaction valued at USD 13.2 billion.
"Today's announcement marks a significant milestone in the ongoing transformation of the Johnson Controls portfolio," said chairman and chief executive officer George Oliver, in a press release. "The sale of our Power Solutions business will create value for investors by streamlining our portfolio and giving us increased financial flexibility to strengthen our balance sheet, return capital to shareholders and create optionality in our Buildings business. This focused portfolio will allow us to capitalize on secular growth trends and to deliver strong financial performance through improved free cash flow conversion, lower capital intensity and continued margin expansion."

Net cash proceeds are expected to be USD 11.4 billion after tax and transaction-related expenses. The Company expects to deploy USD 3.0 to USD 3.5 billion of proceeds towards debt paydown and retain an investment grade credit rating. The remaining proceeds will be available to return to shareholders.

Mr. Oliver continued, "With this transaction, Johnson Controls becomes a pure-play building technologies and solutions provider that is better positioned to lead the integration and evolution of the connected building and to capture strategic opportunities in the HVAC industry. I would like to thank the Power Solutions team for their significant contributions over the years and their dedication throughout the strategic review process."

Johnson Controls' Power Solutions business is working in partnership with its customers to meet increasing electrification requirements in vehicles. The busiess' 15'000 Power Solutions employees create, manufacture, and distribute the battery technologies for virtually every type of vehicle.

In fiscal 2018, Power Solutions generated USD 8.0 billion in revenue and USD 1.68 billion in earnings before EBITDA.

The transaction is expected to close by summer next year, subject to customary closing conditions and required regulatory approvals.
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December 13 2018 1:08 pm V11.10.14-1