Ireland-based Johnson Controls International plc, which has its United States headquarters in Glendale, Wisconsin, has announced a definitive agreement to sell its Power Solutions business to Toronto-based Brookfield Business Partners LP. The Power Solutions business unit includes lead acid battery manufacturing and recycling operations, including a large smelting and recycling plant in Florence, South Carolina.
Johnson Controls has identified Brookfield as the primary buyer of the sold assets, “together with institutional partners [that include] Caisse de dépôt et placement du Québec, in a cash transaction valued at $13.2 billion.” The transaction is expected to close by the end of June, subject to meeting closing conditions and regulatory approval.
“Today’s announcement marks a significant milestone in the ongoing transformation of the Johnson Controls portfolio,” says the firm’s 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.”
Adds the CEO, “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 describes its former Power Solutions business as “a world leader working in partnership with its customers to meet increasing electrification requirements in vehicles” that has more than 15,000 employees and the ability to manufacture “the most advanced battery technologies for virtually every type of vehicle.”
Brookfield Business Partners describes itself as focusing on acquiring “high-quality businesses” to apply its “global investing and operational expertise to create value, with a focus on profitability, sustainable margins and sustainable cash flows.”
According to Johnson Controls, in its 2018 fiscal year, the Power Solutions unit generated $8 billion in revenue and $1.68 billion in earnings before interest, taxes, depreciation and amortization (EBITDA) for the firm.
Johnson Controls has roots in Wisconsin dating to the 1880s. In 2016 it merged with Ireland-based Tyco International in a move considered an “inversion” designed to avoid U.S. tax obligations of as much as $150 million annually. The merged company adopted the Johnson Controls name.