Johnson Controls to Sell Residential and Light Commercial HVAC Businesses

Core Insights - Johnson Controls has agreed to sell its Residential and Light Commercial (R&LC) HVAC business to Bosch for a total transaction value of $8.1 billion, with Johnson Controls receiving approximately $6.7 billion [1][5] - This divestiture is part of Johnson Controls' strategy to transform into a pure-play provider of comprehensive solutions for commercial buildings, simplifying its portfolio and enhancing strategic focus [2][3] Transaction Details - The sale includes the North America Ducted business and a global joint venture with Hitachi, where Johnson Controls holds a 60% stake [1] - The North America Ducted business is valued at approximately $4.6 billion, representing a multiple of 16.7x fiscal 2023 EBITDA, while the joint venture interest is valued at about $2.1 billion, representing a multiple of 7.5x fiscal 2023 EBITDA [5] - Net cash proceeds to Johnson Controls are expected to be around $5.0 billion after tax and transaction-related expenses [5] Business Impact - The R&LC HVAC business generated approximately $4.5 billion in consolidated revenue in fiscal 2023 and will continue to operate under various brands post-transaction [3] - The transaction is anticipated to be accretive to profit margins, adjusted for equity income impact [5] Future Outlook - Johnson Controls expects to report the operating results of the R&LC HVAC business in discontinued operations starting in the fourth fiscal quarter of 2024 [7] - The company anticipates that the transformation will position it for higher growth and enhanced long-term value for shareholders [3][6] Earnings Update - Johnson Controls expects adjusted earnings per share for the third fiscal quarter of 2024 to be slightly ahead of previous guidance [8]