Johnson will cut debt with batteries sale

Source: Xinhua | 2018-11-14

JOHNSON Controls International is to sell its power solutions business, which makes car batteries, to investment firm Brookfield Business Partners, in a cash deal valued at US$13.2 billion.

The agreement will allow Johnson Controls to focus on its building technologies and solutions business, which makes heating, ventilation and air conditioning systems, as well as building access control and fire detection systems.

The deal represents the biggest shake-up at Johnson Controls since its merger in 2016 with Tyco International.

Johnson Controls’ power solutions business, which makes and distributes about 154 million lead-acid batteries for passenger cars and light trucks annually, carries higher margins but has been capital intensive for Johnson Controls, analysts have said.

The company expects to deploy US$3 billion to US$3.5 billion of proceeds toward debt paydown and retain an investment grade credit rating.

More deals in the sector are likely, as industrial conglomerates continue to separate businesses that are too disparate in terms of financial performance.

Centerview Partners and Barclays were financial advisers to Johnson Controls, and Simpson Thacher served as legal advisers.