CORK, Ireland, 23 July 2024: Johnson Controls International (JCI) has announced that it has reached a definitive agreement to sell its Residential and Light Commercial (R&LC) HVAC business in an all-cash transaction to the Bosch Group. Making the announcement through a Press Release, JCI said the transaction includes the North America Ducted business and global Residential joint venture with Hitachi, of which Johnson Controls owns 60% and Hitachi owns 40%. The total transaction is valued at USD 8.1 billion, and the company’s portion of the consideration is approximately USD 6.7 billion, JCI said. As part of the transaction, Hitachi will retain certain ductless HVAC assets located in Shimizu, Japan, JCI said.

George Oliver, Chairman and CEO, Johnson Controls, said: “We are pleased to have reached this pivotal milestone, which accelerates our transformation and positions Johnson Controls as a simpler, higher-growth company.

“Johnson Controls is already benefiting from our transformation, which enables the unparalleled value proposition we provide to customers, and exposure to rapidly accelerating demand in the data centre market and other key macro-economic tailwinds. We believe Johnson Controls is well-positioned for its next phase of growth to deliver enhanced, long-term value to shareholders.”

In fiscal 2023, JCI said, the R&LC HVAC business generated approximately USD 4.5 billion in consolidated revenue. Following the close of the transaction, the R&LC HVAC business will continue to provide residential and light commercial HVAC products under the York and Hitachi brands as well as Coleman, Champion, Luxaire, Guardian, Evcon, TempMaster and others, the company added.

Christian Fischer, Deputy Chairman of the Board of Management, Robert Bosch, said, “Johnson Controls’ Residential & Light Commercial business has a consistent track record of excellence within the HVAC industry. Together with our future colleagues in the acquired business, we want to seize the huge opportunities offered by the market for the further growth of this new unit. The acquired entities will strengthen Bosch’s Home Comfort Group in an extremely attractive segment and will become part of the Bosch core business.”

JCI said the total consideration of approximately USD 6.7 billion includes about USD 4.6 billion for its North America Ducted business, representing a multiple of 16.7 times fiscal 2023 EBITDA. It includes approximately USD 2.1 billion for its interest in the Johnson Controls-Hitachi Air Conditioning joint venture, representing a multiple of 7.5 times fiscal 2023 EBITDA, the company said. The transaction is expected to be accretive to profit margins, adjusted for the impact of equity income, the company added.

Net cash proceeds to Johnson Controls are expected to be approximately $5.0 billion after tax and transaction-related expenses, the company said. Johnson Controls said the transaction is expected to close in approximately 12 months, subject to required regulatory approvals and other customary closing conditions. Johnson Controls said the company expects to report the operating results of the R&LC HVAC business in discontinued operations beginning in the fourth fiscal quarter of 2024.

Johnson Controls said it expects 2024 third fiscal quarter adjusted earnings per share to be slightly ahead of its previously issued guidance range. The company added it will report third fiscal quarter earnings on July 31, 2024.