Follow
Subscribe

Major Supplier Johnson Controls Sells its Auto Battery Business for $13.2 Billion

Home > News > Content

【Summary】Major automotive part supplier Johnson Controls is exiting the auto industry. The company announced sale of its automotive battery business Power Solutions to a group led by Canada-based Brookfield Business Partners LP for $13.2 billion in cash.

Xiaoli Tian    Nov 19, 2018 12:53 PM PT
Major Supplier Johnson Controls Sells its Auto Battery Business for $13.2 Billion

Major automotive part supplier Johnson Controls is exiting the auto industry. The company announced sale of its automotive battery business Power Solutions last week to a group led by Canada-based Brookfield Business Partners LP for $13.2 billion in cash.

The sale of Power Solutions is the final move in the transformation of Johnson Controls International (JCI) into a non-automotive company for the first time in forty years.

With the move, the company is returning to its roots and will focus on making climate control systems and fire safety systems for commercial buildings.

Johnson Controls' global headquarters is in Glendale, Wisconsin. The company is the world's largest manufacturer of automotive batteries. The company produces lithium-ion and lead-acid batteries for many automakers, which equates to nearly one-third of the world's car batteries.

JCI's battery business accounted for $8 billion of the company's $31.4 billion in revenue in its fiscal year ended Sept 30.

"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," Johnson Controls chairman and CEO George Oliver said in a statement.

800x-1.jpg

Johnson Controls first entered the automotive industry in 1978, when it acquired a battery producer called Globe-Union. Seven years later, it bought seatmakers Hoover Universal and Ferro Manufacturing.

By 2011, JCI was ranked seventh on Automotive News Europe's list of the top 100 automotive suppliers, with global original equipment revenue of $21.3 billion in the fiscal year.

However, the company then began to dismantle its automotive businesses in 2015.

In 2015, the company spun off its automotive interiors division as a joint venture called Yanfeng Automotive Trim Systems Co. The following year it spun off of its seating unit, now known as Adient.

Now that is no longer subsidiary of JCI, Power Solutions plans to keep its existing business model and not switch to producing EV batteries as other companies are doing.

"We will not participate in the high-voltage market," said Power Solutions President Joe Walicki to Automotive News of the EV segment. "The big consumer electronics suppliers are in that space. Our space is low-voltage batteries."

Walicki said he is sticking with his $780 million plan to boost worldwide production of an emerging technology known as absorbent glass mat batteries, which are improved lead-acid batteries optimized for vehicles with stop-start systems.

Johnson Controls said the deal to sell off its battery division is expected to close by June 30, 2019.

Prev                  Next
Writer's other posts
Comments:
    Related Content