Summary
Johnson Controls International Plc is exploring strategic options for two parts of its security business - the Access Control and Intrusion Detection units - that could collectively be worth up to $4.5 billion, according to people familiar with the situation. The company is working with financial advisers to solicit interest in the businesses, and is considering separate sales or a combined transaction, while also retaining the option to keep one or both units.
Details of the process
Sources say Johnson Controls has begun a process with advisers to attract potential buyers for the two security-related units. Management will initially seek bids for each unit independently, but could ultimately sell both units together to a single purchaser if that proves preferable. These deliberations are described as being at an early stage, and no decisions have been made.
Market reaction and recent portfolio moves
Following the report, Johnson Controls stock rose 1.6% in after-hours trading, even though shares had ended the regular trading day down 3.4%. The potential divestitures would represent the first substantive portfolio change since Joakim Weidemanis assumed the chief executive role last year.
Last year the company completed a major sale of its residential and light commercial HVAC business to Robert Bosch GmbH in a transaction valued at about $8 billion. Johnson Controls currently provides air systems, building management solutions, HVAC controls, security and fire safety products, among other offerings.
Implications
The company’s efforts to solicit interest for these security units indicate management is reviewing its portfolio mix and potential capital allocation options. Because the process is in its early stages, outcomes could include separate divestitures, a combined sale, or retention of the units.