International. Johnson Controls announced a definitive agreement to sell its Power Solutions business to Brookfield Business Partners along with institutional partners (collectively, "Brookfield") including Caisse de dépôt et placement du Québec in a cash transaction valued at US$13.2 billion.
"The announcement marks a significant milestone in the ongoing transformation of Johnson Controls' portfolio," said President and Chief Executive Officer George Oliver. "The sale of our Power Solutions business will create value for investors by streamlining our portfolio and giving us greater financial flexibility to strengthen our balance sheet, return capital to shareholders and create options in our Buildings business. This focused portfolio will allow us to capitalize on "secular growth trends and deliver strong financial performance through improved free cash flow conversion, lower capital intensity, and continued margin expansion."
Net cash income is expected to be $11.4 billion after taxes and transaction-related expenses.
The Company expects to deploy $3.0 to $3.5 billion of revenue for debt repayment and retain an investment-grade credit rating. The remaining winnings will be available to return to shareholders, with more specific details to be announced at the close of the transaction.
Mr. Oliver continued, "With this transaction, Johnson Controls becomes a provider of pure building solutions and technologies that is best 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 important contributions over the years and their dedication throughout the strategic review process."
Johnson Controls' Power Solutions business works in partnership with its customers to meet the growing electrification requirements in vehicles. Power Solutions' 15,000 employees create, manufacture and distribute the most advanced battery technologies for virtually all types of vehicles. These technologies deliver exceptionally 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 twelve-month EBITDA.
