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November 13, 2018

Johnson Controls sells Power business for US$13.2bn

Johnson Controls International has unveiled a definitive agreement to sell its Power Solutions business to Brookfield Business Partners, together with institutional partners including Caisse de dépôt et placement du Québec in a cash transaction valued at US$13.2bn.

By Rhodri Morgan

Johnson Controls International has unveiled a definitive agreement to sell its Power Solutions business to Brookfield Business Partners, together with institutional partners including Caisse de dépôt et placement du Québec in a cash transaction valued at US$13.2bn.

“Today’s announcement marks a significant milestone in the ongoing transformation of the Johnson Controls portfolio,” said chairman and CEO, George Oliver. “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 capitalise 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 US$11.4bn after tax and transaction-related expenses.

Johnson Controls’ Power Solutions business works to meet electrification requirements in vehicles.

In fiscal 2018, Power Solutions generated US$8bn in revenue and US$1.68bn in earnings before interest, taxes, depreciation and amortisation.

The transaction is expected to close by June 30, 2019, subject to customary closing conditions and required regulatory approvals. Power Solution’s operating results will be reported in discontinued operations beginning in the first fiscal quarter of 2019.

Centerview Partners and Barclays served as financial advisors to Johnson Controls and Simpson Thacher served as legal advisors.

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