Johnson Controls completes HVAC business sale to Bosch
Iain Hoey
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Johnson Controls confirms $8.1 billion HVAC divestment
Johnson Controls has announced the completion of its sale of the Residential and Light Commercial HVAC business to the Bosch Group.
According to Johnson Controls, the all-cash transaction is valued at $8.1 billion.
The company confirmed that it has received approximately $5 billion in net cash proceeds after taxes and transaction-related expenses.
Johnson Controls said the deal includes its North America ducted business and its global residential joint venture with Hitachi, while certain Hitachi ductless HVAC assets in Japan remain with Hitachi.
The company added that the divestment aligns with its strategy to focus on building technologies and services.
CEO comments on transition
Joakim Weidemanis, CEO of Johnson Controls, said: “The completion of this transaction is an important milestone for Johnson Controls and positions our company as a leading pure-play provider of innovative building solutions.
“Johnson Controls is embarking on its next era, and I’m confident in our ability to reach our full potential as a faster-growing, more profitable, technology-based and service-enabled company.
“I look forward to the journey ahead as we transform our industry for years to come and work together to deliver even greater value for our customers, team members and shareholders.
Weidemanis added: “I want to thank the Residential and Light Commercial HVAC team for their service and dedication and wish them the best of success as they join the Bosch Group.”
Transaction details
Johnson Controls said its portion of the consideration amounts to approximately $6.7 billion.
The transaction was initially announced earlier this year as part of a broader restructuring strategy.
The company stated that the agreement is part of its focus on building management systems and services.
According to Johnson Controls, the deal strengthens its balance sheet and creates additional capital return opportunities for shareholders.
The company confirmed that Bosch will now oversee the R&LC HVAC operations and integration.
Capital return plans
Johnson Controls said it will implement a $5 billion accelerated share repurchase program.
This repurchase initiative is part of its existing share buyback authorisation, which currently has $9.8 billion available.
The company expects the program to begin in the coming weeks.
According to Johnson Controls, the repurchase will be funded from the proceeds of the HVAC sale.
The company added that the transaction provides resources to drive long-term growth and shareholder value.
Market outlook
Johnson Controls explained that its exit from the residential HVAC segment allows greater focus on core building solutions.
The company noted that it aims to expand its offerings in automation, energy efficiency, and integrated services.
Industry observers, as reported by Johnson Controls, have indicated that the Bosch acquisition strengthens Bosch’s HVAC presence in North America and Asia.
The company said that it expects its remaining operations to achieve stronger margins and improved growth trajectories.
Johnson Controls stated that it remains committed to technology-based building management solutions.
Johnson Controls completes HVAC business sale to Bosch: summary
Johnson Controls has completed the sale of its Residential and Light Commercial HVAC business to the Bosch Group.
The all-cash transaction is valued at $8.1 billion.
Johnson Controls’ portion of the consideration is approximately $6.7 billion.
Net cash proceeds to Johnson Controls after tax and expenses are around $5 billion.
The deal includes the North America ducted business and the global residential joint venture with Hitachi.
Hitachi has retained certain ductless HVAC assets in Shimizu, Japan.
Johnson Controls plans to return a portion of the proceeds through a $5 billion accelerated share repurchase program.
The program is expected to begin in the coming weeks.
The transaction was previously announced earlier this year.
Johnson Controls confirmed the sale aligns with its strategy to focus on building technologies and services.