Johnson Controls International (JCI) has announced a definitive agreement to sell its battery business Power Solutions to US and Canadian investment firms Brookfield Business Partners and CDPQ in a cash transaction valued at US$13.2 billion.
The deal ends months of feverish speculation about the future of Power Solutions.
New York and Toronto-listed Brookfield is the business services and industrials company of Brookfield Asset Management. Quebec-based CDPQ (Caisse de dépôt et placement du Québec) is an institutional investment fund manager.
The Brookfield group said it currently owns, operates and invests in nearly 2,700 megawatts of pumped hydro and battery storage facilities across the US and UK.
JCI expects to pocket US$11.4bn after taxes and other transaction-related expenses. Of this sum, between $3bn and $3.5bn will be put toward debt pay-down, which will allow JCI to retain its investment grade credit rating.
As the world’s leading supplier of lead-acid batteries, Power Solutions encompasses major brands including Continental, OPTIMA, and Heliar. Together, Power Solutions generated $8bn in revenue in fiscal 2018, giving earnings of $1.68bn before interest, taxes, depreciation and amortisation.
Brookfield Business Partners Cyrus Madon (pictured) said: “We look forward to partnering with the management team to continue growing this world-class business and build on its track record of innovation.”
Stéphane Etroy, CDPQ’s executive VP and head of private equity, said the deal “enables us to acquire not only the world leader in automotive batteries, but also a model in terms of environmental and health and safety measures, that runs one of the most efficient industrial recycling systems globally”.
JCI will retain few interests in Power Solutions in the long run— namely, some pension liabilities and capital leases, totalling <$100m— but has entered transitional service agreements that will last for one to two years past the deal’s close, which is expected to be by the end of June 2019.
JCI’s chairman and CEO George Oliver said the sale would see the group become “a pure-play building technologies and solutions provider”.
