Johnson Controls International has reached a definitive agreement to sell its Residential and Light Commercial (R&LC) HVAC business in an all-cash transaction to the Bosch Group.
The transaction includes the North America Ducted business and global Residential joint venture with Hitachi, Ltd, of which Johnson Controls owns 60 per cent and Hitachi owns 40 per cent.
The total transaction is valued at $US8.1 billion, and the company's portion of the consideration is approximately $6.7 billion. As part of the transaction, Hitachi will retain certain ductless HVAC assets located in Shimizu, Japan.
Following the close of the transaction, the Johnson Controls portfolio will be substantially simplified with enhanced strategic focus, aligned with the company's objective to be a pure-play provider of comprehensive solutions for commercial buildings.
Johnson Controls delivers a unique value proposition to customers, with its unmatched service and digital offerings that improve commercial building efficiency and reduce operational costs through its OpenBlue digital platform.
The transaction represents a significant portion of the company's previously announced strategic evaluation of non-core product lines, according to JCI chair & CEO, George Oliver.
"We are pleased to have reached this pivotal milestone, which accelerates our transformation and positions Johnson Controls as a simpler, higher-growth company," Oliver said.
“Johnson Controls is already benefiting from our transformation, which enables the unparalleled value proposition we provide to customers, and exposure to rapidly accelerating demand in the data centre market and other key macro-economic tailwinds.
“We believe Johnson Controls is well-positioned for its next phase of growth to deliver enhanced, long-term value to shareholders."
Johnson Controls' R&LC HVAC business, which is reported in the Global Products segment, engineers and manufactures ducted and ductless HVAC equipment and components globally for both residential and light commercial applications.
In fiscal 2023, the R&LC HVAC business generated approximately $4.5 billion in consolidated revenue.
Following the close of the transaction, the R&LC HVAC business will continue to provide residential and light commercial HVAC products under the York and Hitachi brands as well as Coleman, Champion, Luxaire, Guardian, Evcon, TempMaster and others.
Christian Fischer, the deputy chairman of the board of management of Robert Bosch GmbH, said JCI’s Residential & Light Commercial business has a consistent track record of excellence within the HVAC industry.
“Together with our future colleagues in the acquired business, we want to seize the huge opportunities offered by the market for the further growth of this new unit,” Fischer said.
“The acquired entities will strengthen Bosch's Home Comfort Group in an extremely attractive segment and will become part of the Bosch core business."
The total consideration of approximately $6.7 billion to Johnson Controls includes approximately $4.6 billion for its North America Ducted business representing a multiple of 16.7x fiscal 2023 EBITDA and includes approximately $2.1 billion for its interest in the Johnson Controls-Hitachi Air Conditioning joint venture representing a multiple of 7.5x fiscal 2023 EBITDA.
Net cash proceeds to Johnson Controls is expected to be approximately $5.0 billion after tax and transaction-related expenses.
The transaction is expected to close in approximately 12 months, subject to required regulatory approvals and other customary closing conditions.