November 8, 2018: International news agencies Reuters and Bloomberg reported on October 29 that ‘people familiar with the matter’ have confirmed Johnson Controls is poised to sell its battery business to global investment firm Brookfield Asset Management (pictured).
If the deal goes ahead, it could be one of the largest leveraged buy-outs in the world, with figures of between $12 billion and $14 billion being quoted by the news agencies.
In August 2018, Batteries International reported press speculation that four firms had thrown their hats in the ring to buy the business — Apollo Global Management, Clayton Dubilier & Rice and a consortium of Onex Corp and the Canadian Pension Plan Investment Board as well as Brookfield — but JCI director, global media relations Fraser Engerman would not confirm the reports, only saying it was possible an announcement would be made in early October.
When Batteries International contacted him about the latest reports, he refused to comment.
Brookfield Asset Management, which says it is a “leading global alternative asset manager, focused on investing in long-life, high quality assets across real estate, infrastructure, renewable power and private equity”, also did not respond to a query from Batteries International.
Brookfield, which began in 1899 in Brazil, where it helped to launch the country’s first electrical and transport utility, now has more than 100 offices in 30 countries.
It already operates businesses in the energy storage sector, with pumped hydro and battery storage facilities across the US and UK.
Johnson Controls’ head office is in Cork, Ireland, but its Power Solutions business is based in Glendale, California.
It first announced it was considering selling off the battery business on March 12 this year, although there were rumours about it more than five years ago.
The firm’s merger with the Ireland-based fire and security firm Tyco in 2016 and relocation to the country for its corporate headquarters was a move to prioritize its market position in heat, ventilation and air conditioning (HVAC) systems, fire and security solutions and integrated building management systems, said CEO George Oliver at the time. It also provided large tax savings — Ireland’s corporate tax rate is much lower than the US.
JCI began life in 1885, when Warren Johnson partnered businessman William Plankinton to form the Johnson Electric Service Company and came up with the first room thermostat.
Its building control systems were to form the core of the company’s business, although it also worked in plastics, cars and pneumatic clocks as well as a wide range of other products.
The company changed its name to Johnson Controls in 1974, after merging with Penn Controls — and when it bought Globe-Union in 1978, it became the largest US manufacturer of automotive batteries.
In 1985 it added Hoover Universal and Ferro Manufacturing to its list of firms, which meant it could now produce complete automotive seating systems as well as batteries.
A huge boost to the battery business was achieved in 2002, when JCI bought Varta, based in Germany, and is one of its most famous battery brands.
Power Solutions opened its first US battery recycling facility in 2012 in South Carolina, and in February 2017 became the first licensee of Aqua Metals’ lead battery recycling technology.