Bosch to buy Johnson Controls-Hitachi AC assets for $8 billion

By Ludwig Burger and Shivani Tanna

(Reuters) -German technology group Bosch has agreed to acquire Johnson Controls' and Hitachi's residential ventilation businesses for $8 billion, it said on Tuesday, in what will be the unlisted group's largest takeover to date.

Bosch said that Johnson's heating, ventilation and air conditioning (HVAC) business for residential and small commercial applications would strengthen its Bosch Home Comfort arm, boosting the division's sales to 9 billion euros ($9.8 billion) from 5 billion euros currently.

Johnson Controls International (JCI) said separately that it stands to receive $6.7 billion in cash from the transaction.

Bosch said the addition would strengthen its presence in the United States and Asia, including sales of heat pumps as the company looks to capitalise on global efforts to reduce oil and gas heating to cut greenhouse gases.

The sale of the JCI assets includes its North America ducted business and a joint venture with Japanese group Hitachi, which holds a 40% stake.

Bosch said it expects the global market for the heating and cooling of buildings to grow 40% by 2030, driven by technological progress, the fight against climate change and new regulations.

The deal will be funded through internal means, the company added.

JCI said the transaction is valued at $8.1 billion overall, when including ductless HVAC production sites in Shimizu, Japan, which Hitachi will acquire.

Bosch CEO Stefan Hartung has said the company was looking at bigger, potentially global, acquisition targets and that the group was open to listing some of its divisions on the stock market.

Reuters reported in June that Bosch was considering making a bid for U.S. appliances maker Whirlpool, which has a market value of about $4.8 billion.

Hartung declined to comment on Whirlpool on Tuesday but said that the Johnson-Hitachi deal would keep the company busy for 12 months.

Bosch, which had revenue of about 92 billion euros last year, also makes car parts, factory gear, power tools and home appliances.

Lennox International and Samsung Electronics were among suitors competing for the Johnson Controls assets, people familiar with the matter told Reuters in March.

JCI said it Centerview Partners and Citi acted as its financial advisers while Simpson Thacher served as legal adviser.

($1 = 0.9194 euros)

(Reporting by Ludwig Burger in Frankfurt and Shivani Tanna in BengaluruEditing by Sonia Cheema, Savio D'Souza, Kirsten Donovan and David Goodman)