#USA #Johnson Controls #Cork #Bosch Group #HVAC Business

Johnson Controls Completes Strategic Sale of HVAC Business

In a landmark transaction, Johnson Controls International plc (NYSE: JCI), a frontrunner in the field of smart and sustainable buildings, has officially completed the sale of its Residential and Light Commercial (RLC) HVAC business to the Bosch Group. This all-cash deal, valued at $8.1 billion, marks a pivotal moment in Johnson Controls' strategy, steering the company towards a future focused exclusively on innovative building technologies.

A New Era for Johnson Controls

The CEO of Johnson Controls, Joakim Weidemanis, emphasized the importance of this sale in a recent statement, highlighting how it represents a substantial milestone for the company. This transition allows Johnson Controls to redefine itself as a dedicated provider of cutting-edge building solutions. Weidemanis expressed confidence that the company is entering a new era of growth, driven by technology and enhanced service offerings, which will ultimately deliver greater value to customers, employees, and shareholders alike.

Reflecting on the employees of the HVAC division, Weidemanis thanked the team for their hard work and dedication, wishing them success as they integrate into the Bosch Group. The move is expected to not only streamline Johnson Controls' operations but also to empower it to harness new growth opportunities within the fast-evolving building technology sector.

Transaction Details

The financial breakdown of this substantial transaction reveals that Johnson Controls will receive approximately $6.7 billion from the sale, with net cash proceeds expected to be around $5.0 billion after accounting for taxes and related transaction expenses. This considerable inflow of cash aligns with the company's strategic capital allocation policy, as Johnson Controls intends to initiate a $5.0 billion accelerated share repurchase program shortly after the sale is finalized. The full sharing buyback plan currently has about $9.8 billion available.

The deal covers the North American ducted business operations and includes the global residential joint venture with Hitachi, Ltd. Nevertheless, Hitachi retains certain ductless HVAC assets located in Shimizu, Japan. This arrangement allows both companies to leverage their expertise while positioning Johnson Controls to focus more intently on its primary offerings.

Strategic Advisors

In orchestrating this significant transaction, Johnson Controls enlisted the expertise of several advisory firms. Centerview Partners and Citi acted as financial advisors, while Simpson Thacher provided legal counsel. In addition, Joele Frank served as an advisor for investor relations, ensuring comprehensive support throughout the sale process.

The strategic sale of Johnson Controls' HVAC segment not only indicates a shift in the company's operational focus, but it also reflects broader trends in the market where brands are increasingly opting for specialization over diversification. As companies navigate a rapidly changing business landscape characterized by technological advancements and evolving consumer demands, adaptability will be key to maintaining competitive advantage.

Conclusion

As Johnson Controls embarks on this transformative journey, the emphasis will undoubtedly be on leveraging technology to enhance building performance globally. The recent sale represents a commitment not only to bold strategic moves but also to the future of building sustainability and innovation. By fully reorienting its focus towards becoming a pure-play provider of building solutions, Johnson Controls sets the stage for enduring growth and market leadership in the industry.

For more information on Johnson Controls and its innovative approaches to building solutions, visit www.johnsoncontrols.com or follow them on social media platforms.