Johnson Controls Hits Snag in Process to Sell Car-Battery Business
November 08 2018 - 2:41PM
Dow Jones News
By Miriam Gottfried
Johnson Controls International PLC has hit a last-minute snag in
its quest to sell its automotive-battery business, according to
people familiar with the matter.
The company was nearing a deal to sell the unit to Brookfield
Asset Management Inc. for close to $14 billion, the people said.
Some analysts expected a deal with the private-equity firm to be
announced ahead of Johnson Controls' fiscal fourth-quarter earnings
report Thursday morning.
There was no deal announcement. Now, Apollo Global Management
LLC, an early contender, has been invited to rebid for the
business, the people said.
Apollo, which had offered around $13 billion, stopped its work
on the deal when it became clear that Brookfield had won the
auction, but it remains interested in the asset and is likely to
step back into the ring, they said. Apollo was further along than
Brookfield in its due diligence in what would be a complicated
carve-out and would have been ready to announce a deal for the
business soon after the Oct. 26 bidding deadline, some of the
people said.
It is unclear if other parties have also been asked to submit
new bids, and it is still possible that Brookfield will prevail or
that a deal won't happen.
If a deal is reached, it would be one of the largest leveraged
buyouts in a year filled with big ones. Private-equity firms have
raised record amounts of cash that they must put to work in order
to collect lucrative fees.
In January, Blackstone Group LP announced a $17 billion deal for
a majority stake in the financial-data business of Thomson Reuters
Corp. Carlyle Group LP in March said it, along with investment firm
GIC, would purchase the specialty chemicals business of Akzo Nobel
NV for about $12.6 billion, including debt. Also earlier this year,
KKR & Co. announced it would buy BMC Software Inc. and Envision
Healthcare Corp. for $8.3 billion and nearly $10 billion,
respectively, including debt.
Apollo, which raised $24.6 billion last year for the largest
private-equity fund ever and is also known for doing big buyouts,
has yet to do a deal of that magnitude. It is also bidding for
aluminum products maker Arconic Inc. in a deal that could top $10
billion, people familiar with the matter have told The Wall Street
Journal.
Johnson Controls is an industrial and technology conglomerate
headquartered in Cork, Ireland. It said in March it had hired
investment bank Centerview Partners to help it explore strategic
alternatives for its power solutions segment, as the battery
business is known.
The unit, which is the world's largest maker of automotive
batteries, generated $7.3 billion in revenue and $1.6 billion in
earnings before interest, taxes, depreciation and amortization in
2017. Fiscal fourth-quarter profit in the segment fell 2% compared
with the prior year, hit by higher lead prices and foreign
currency, the company said Thursday.
On a call with analysts to discuss its results, Johnson Controls
said it had made "significant progress" related to the strategic
review of its power business.
"We have assessed multiple options and are now in the final
stages of that review as we weigh all possibilities before reaching
a final decision," said Chief Executive George Oliver.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
November 08, 2018 14:26 ET (19:26 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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