CORK, Ireland, Nov. 13, 2018 /PRNewswire/ -- Johnson Controls
International plc (NYSE: JCI) today announced a definitive
agreement to sell its Power Solutions business to Brookfield
Business Partners L.P. (NYSE:BBU) (TSX:BBU.UN) ("Brookfield
Business Partners") together with institutional partners
(collectively, "Brookfield") including Caisse de dépôt et placement
du Québec in a cash transaction valued at $13.2 billion.
"Today's announcement marks a significant milestone in the
ongoing transformation of the Johnson Controls portfolio," said
chairman 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 increased financial flexibility to strengthen our balance sheet,
return capital to shareholders and create optionality in our
Buildings business. This focused portfolio will allow us to
capitalize on secular growth trends and to deliver strong financial
performance through improved free cash flow conversion, lower
capital intensity and continued margin expansion."
Net cash proceeds are expected to be $11.4 billion after tax and transaction-related
expenses.
The Company expects to deploy $3.0
to $3.5 billion of proceeds towards
debt paydown and retain an investment grade credit rating. The
remaining proceeds will be available to return to shareholders,
with more specific details to be announced around the close of the
transaction.
Mr. Oliver continued, "With this transaction, Johnson Controls
becomes a pure-play building technologies and solutions provider
that is better 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 significant contributions over the years and their
dedication throughout the strategic review process."
Johnson Controls' Power Solutions business is a world-leader
working in partnership with its customers to meet increasing
electrification requirements in vehicles. Our 15,000 Power
Solutions employees create, manufacture, and distribute the most
advanced battery technologies for virtually every type of vehicle.
These technologies deliver uniquely 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 trailing twelve month EBITDA.
The transaction is expected to close by June 30, 2019, subject to customary closing
conditions and required regulatory approvals. Power Solution's
operating results will be reported in discontinued operations
beginning in the first fiscal quarter of 2019.
Centerview Partners and Barclays served as financial advisors to
Johnson Controls, and Simpson Thacher served as legal advisors.
CONFERENCE CALL DETAILS
The company will host a conference call at 9:00 a.m. EST to discuss the transaction.
When: Tuesday, Nov. 13, 2018 at
9:00 to 9:30 a.m. EST
How: The conference call for investors can be accessed in the
following ways:
- Live via webcast at
http://investors.johnsoncontrols.com/news-and-events/events-and-presentations
- Live via telephone (for "listen-only" participants and those
who would like to ask a question) – by dialing 888-324-9610 (in
the United States) or 630-395-0255
(outside the United States),
passcode "Johnson Controls."
Replay: The replay can be accessed in the following ways
- Replay via webcast - if you are unable to participate during
the live webcast, the call will be archived at
http://investors.johnsoncontrols.com/news-and-events/events-and-presentations
- Replay via telephone – by dialing 800-283-9442 (in the United States) or 402-998-0895 (outside
the United States), passcode
58237, from 10:30 a.m. (ET) on
Nov. 13, 2018, until 9:29 p.m. (ET) on Nov. 20,
2018.
About Johnson Controls:
Johnson Controls is a global diversified technology and multi
industrial leader serving a wide range of customers in more than
150 countries. Our 120,000 employees create intelligent buildings,
efficient energy solutions, integrated infrastructure and next
generation transportation systems that work seamlessly together to
deliver on the promise of smart cities and communities. Our
commitment to sustainability dates back to our roots in 1885, with
the invention of the first electric room thermostat. We are
committed to helping our customers win and creating greater value
for all of our stakeholders through strategic focus on our
buildings and energy growth platforms. For additional information,
please visit http://www.johnsoncontrols.com or follow us
@johnsoncontrols on Twitter.
Johnson Controls International plc
Cautionary Statement Regarding Forward-Looking
Statements
Johnson Controls International plc has made statements in this
communication that are forward-looking and therefore are
subject to risks and uncertainties. All statements in this document
other than statements of historical fact are, or could
be, "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. In this
communication, statements regarding
Johnson Controls' future financial position, sales,
costs, earnings, cash flows, other measures of results of
operations, synergies and integration opportunities,
capital expenditures and debt levels are
forward-looking statements. Words such as "may," "will," "expect,"
"intend," "estimate," "anticipate," "believe," "should,"
"forecast," "project" or "plan" and terms of similar
meaning are also generally intended to identify forward-looking
statements. However, the absence of these words does not mean
that a statement is not forward-looking. Johnson Controls
cautions that these statements are subject to numerous important
risks, uncertainties, assumptions and other factors, some of which
are beyond Johnson Controls' control, that could cause
Johnson Controls' actual results to differ
materially from those expressed or implied by such forward-looking
statements, including, among others, risks related
to: any delay or inability of Johnson Controls to
realize the expected benefits and synergies of recent
portfolio transactions such as the merger with Tyco and the
spin-off of Adient, changes in tax laws (including but
not limited to the recently enacted Tax Cuts and Jobs Act),
regulations, rates, policies or interpretations, the loss of key
senior management, the tax treatment of recent portfolio
transactions, significant transaction costs and/or
unknown liabilities associated with such transactions, the
outcome of actual or potential litigation relating
to such transactions, the risk that disruptions
from recent transactions will harm Johnson Controls'
business, the strength of the U.S. or other economies,
changes to laws or policies governing foreign trade, including
increased tariffs or trade restrictions, automotive vehicle
production levels, mix and schedules, energy and commodity prices,
the availability of raw materials and component products, currency
rates, cancellation of or changes to commercial arrangements, and
with respect to the disposition of the Power Solutions business,
the expected financial impact and timing of the Power
Solutions disposition, whether and when the required regulatory
approvals for the Power Solutions disposition will be obtained, the
possibility that closing conditions for the Power Solutions
disposition may not be satisfied or waived, and whether the
strategic benefits of the Power Solutions transaction can be
achieved. A detailed discussion of risks related to Johnson
Controls' business is included in the section entitled "Risk
Factors" in Johnson Controls' Annual Report on Form 10-K for the
2017 fiscal year filed with the SEC on November 21, 2017, and its Quarterly Reports on
Form 10-Q for the quarterly periods ended December 31, 2017, March
31, 2018 and June 30, 2018
filed with the SEC on February 2,
2018, May 3, 2018 and
August 2, 2018, respectively, which
are and available at www.sec.gov and www.johnsoncontrols.com under
the "Investors" tab. Shareholders, potential investors and others
should consider these factors in evaluating the forward-looking
statements and should not place undue reliance on such statements.
The forward-looking statements included in this communication
are made only as of the date of this document, unless
otherwise specified, and, except as required by law, Johnson
Controls assumes no obligation, and disclaims any obligation, to
update such statements to reflect events or circumstances occurring
after the date of this communication.
Non-GAAP Financial Information
The Company's press release contains financial information
regarding earnings before interest, taxes, depreciation and
amortization, which is a non-GAAP measure. Management believes the
use of non-GAAP measures, including EBITDA, provides increased
transparency and assists investors in understanding the underlying
operating performance of the business. This metric should be
considered in addition to, and not as replacements for, the most
comparable GAAP measure. See below for non-GAAP reconciliation.
|
Power
|
|
Solutions
|
|
2018
|
|
|
Segment earnings
before
interest, taxes and amortization (EBITA), as reported
|
$
1,417
|
Adjusting
items:
|
|
Transaction
costs
|
8
|
Restructuring costs
and discontinued
operations losses in equity income
|
7
|
Adjusted segment
EBITA
|
$
1,432
|
Depreciation
|
248
|
Segment earnings
before
interest, taxes, depreciation and amortization
(EBITDA)
|
$
1,680
|
|
|
|
|
|
|
CONTACT:
|
Investors:
Antonella
Franzen
(609)
720-4665
Ryan
Edelman
(609)
720-4545
Media:
Fraser
Engerman
(414)
524-2733
|
|
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SOURCE Johnson Controls International plc