Johnson Controls International (JCI) has reached a definitive agreement to sell its Power Solutions (batteries) business to Brookfield Business Partners‚ together with institutional partners including Caisse de depot et placement du Quebec (CDPQ) — in a cash transaction valued at $13.20 billion. The deal is expected to close by June 30, 2019, subject to customary closing conditions and required regulatory approval.
Brookfield Business Partners is the flagship publicly-listed business services and industrials company of Brookfield Asset Management Inc., a global alternative asset manager with more than $300 billion in assets under management.
CDPQ is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As at June 30, 2018, it held CDN$308.30 billion in net assets.
The transaction will be funded with roughly $3 billion in equity and approximately $10.20 billion in long-term debt financing, according to Brookfield. Brookfield expects to fund about 30 percent of the equity on closing from existing liquidity. CDPQ has committed to fund approximately 30 percent of the equity on closing. The balance will be funded by other institutional partners.
Net cash proceeds to JCI are expected to be $11.40 billion after tax and transaction-related expenses. The company is expected to deploy $3 billion to $3.50 billion of the proceeds toward debt paydown. The remaining proceeds will be available to return to shareholders, according to JCI, with details to be announced around the close of the transaction.