Brookfield Business Partners LP and the Caisse de depot et placement du Quebec, together with a group of institutional partners, have signed a deal to buy Johnson Controls’ power solutions business for US$13.2 billion.
The business produces batteries for automakers and aftermarket distributors and retailers.
The companies say it is well positioned to benefit from the growth in demand for advanced batteries, including those used in electric vehicles.
“We are excited to grow our business with the acquisition of power solutions, a global market leader which generates consistent cash flows and profitability,” said Cyrus Madon, chief executive of Brookfield Business Partners.
“We look forward to partnering with the management team to continue growing this world-class business and build on its track record of innovation.”
George Oliver, Johnson Controls chairman and chief executive, said the deal was a significant milestone in the ongoing transformation of the company.
“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,” Oliver said in a statement.
Johnson Controls expects net cash proceeds from the deal to be US$11.4 billion after tax and transaction-related expenses.
It expects to use $3 billion to $3.5 billion to repay debt.
The transaction will be funded with approximately US$3 billion of equity and about US$10.2 billion of long-term debt financing.
Brookfield Business Partners, the main business services and industrials company of Brookfield Asset Management Inc., expects to fund approximately 30 per cent of the equity, while CDPQ will fund about 30 per cent. The balance is being funded by other institutional partners.