Johnson Controls International (NYSE: JCI) today announced an agreement to sell its Power Solutions business to Brookfield Business Partners L.P. (NYSE:BBU) (TSX:BBU.UN) together with institutional partners including Caisse de dépôt et placement du Québec in a cash transaction valued at $13.2 billion. Johnson appears to be selling a profitable business unit with a bright future in order to bolster other businesses.
Net cash proceeds are expected to be $11.4 billion after tax and transaction-related expenses. Johnson expects to deploy $3.0 to $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, with details to be announced around the close of the transaction.
“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,” claimed chairman and chief executive officer George Oliver.
Johnson Controls’ Power Solutions business works in partnership with its customers to meet increasing electrification requirements in vehicles. The 15,000 Power Solutions employees create, manufacture, and distribute the most advanced battery technologies for virtually every type of vehicle. These technologies deliver uniquely sustainable, next-generation performance.
In fiscal 2018, Power Solutions generated $8.0 billion in revenue and $1.68 billion in earnings before interest, taxes, depreciation and amortization (“EBITDA”). The transaction price of $13.2 billion represents a multiple of 7.9x trailing twelve-month EBITDA.
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.
Johnson Controls is a global technology and multi industrial firm serving a wide range of customers in more than 150 countries. About 120,000 employees create intelligent buildings, efficient energy solutions, integrated infrastructure and next generation transportation systems that work to deliver on the promise of smart cities and communities.