The climate technologies unit, which includes Copeland compressor business as well as the whole portfolio of products and services across all HVAC and refrigeration end-markets, generated sales of nearly $5bn in fiscal 2022
US-based Emerson has signed a definitive agreement to divest a 55% stake in its climate technologies unit to private equity funds managed by Blackstone in a deal that values the business at $14bn.
The deal would give Emerson upfront, pre-tax cash proceeds of about $9.5bn and a note of $2.25bn at closing. The company will retain a 45% non-controlling ownership stake in the new standalone joint venture.
Emerson president and CEO Lal Karsanbhai said: “This transaction enables Emerson to partially monetise our Climate Technologies business at an attractive valuation and provides significant upfront cash proceeds to invest in growth, while at the same time enabling Emerson to participate in Climate Technologies’ upside potential upon exit of our non-controlling position.
“We are excited to partner with Blackstone given its successful history of value creation in collaboration with corporate partners. We look forward to working closely with Blackstone to ensure a smooth transition for Climate Technologies’ employees and customers.”
The climate technologies unit includes Copeland compressor business as well as the whole portfolio of products and services across all heating, ventilation, and air conditioning (HVAC) and refrigeration end-markets. The businesses generated sales of around $5bn in fiscal 2022.
The cash consideration will be paid by $5.5bn of fully committed debt financing and $4.4bn of equity contribution from Blackstone.
As a part of the deal, a fully-owned subsidiary of the Abu Dhabi Investment Authority (ADIA) and GIC will invest along with Blackstone.
Blackstone private equity global head Joe Baratta said: “This is a marquee transaction for our private equity business and a testament to our ability to deliver solutions to our partners even in difficult economic and market environments.
“We are proud to be partnered with Emerson to help drive the next stage of growth for this great business. Copeland is the market leader in supplying critical components for residential, commercial and refrigeration climate control systems.
“The business is poised for accelerated growth as it leads the way in helping consumers and businesses shift to more energy-efficient heating and cooling products as part of their carbon reduction efforts.”
The deal, which is subject to regulatory approvals and customary conditions, is anticipated to close in the first half of 2023.