German engineering and electronics group Robert Bosch GmbH has agreed to acquire Johnson Controls International (JCI)'s global heating, ventilation, and air-conditioning (HVAC) business for residential and light commercial buildings in an all-cash deal valued at US$8.1 billion.

About US$6.7 billion of the total consideration will go to JCI, a Cork, Ireland-based provider of smart and sustainable solutions for buildings. Net cash proceeds are expected to be about US$5 billion after tax and transaction-related expenses.

The business generated sales revenue of about €4 billion (US$4.34 billion) in 2023, and employs some 12,000 people worldwide.  

The transaction includes Johnson Controls-Hitachi Air Conditioning Holding (UK) Ltd (JCH), a joint venture between JCI (60%) and Hitachi Global Life Solutions (40%).  As part of the deal, Hitachi will retain certain ductless HVAC assets located in Shimizu, Japan.

Consistent with its capital allocation policy, JCI expects to pay down debt to the extent required to retain its investment-grade rating with the remaining proceeds to be returned to shareholders.

The deal is expected to close in 12 months, subject to required regulatory approvals and other customary closing conditions

Following the deal, Johnson Controls’ portfolio will be substantially simplified with enhanced strategic focus, aligned with the company's objective to be a pure-play provider of comprehensive solutions for commercial buildings.

"We are pleased to have reached this pivotal milestone, which accelerates our transformation and positions Johnson Controls as a simpler, higher-growth company," says JCI chairman and chief executive officer George Oliver.

“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 macroeconomic tailwinds. We believe Johnson Controls is well-positioned for its next phase of growth to deliver enhanced, long-term value to shareholders."

Christian Fischer, the deputy chairman of the board of management of Bosch, says: "Johnson Controls' residential and 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."

The 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.