updated: 01-05-2023 | 09:25
Carrier Global Corporation has announced its plans to acquire Viessmann Climate Solutions for €12 billion in cash and stock, transforming the company into a global leader in intelligent climate and energy solutions. The acquisition of Viessmann Climate Solutions, a privately held company with a 106-year legacy of innovation, will strengthen Carrier's strategy to capitalize on the rapid energy transition in Europe. Carrier also announced its plans to exit its Fire & Security and Commercial Refrigeration businesses, simplifying its business portfolio and accelerating its strategy to establish the company as a global leader in intelligent climate and energy solutions. The acquisition is expected to close by the end of 2023.
Strategic Benefits of the Acquisition
The acquisition of Viessmann Climate Solutions will position Carrier to lead in the rapid climate and energy transition in Europe. The European heat pump segment, in which Viessmann Climate Solutions specializes, is expected to triple in size to $15 billion by 2027.
The acquisition will add the premier asset in the European climate transition market to Carrier's portfolio, with a proven track record and confidence of high, sustained growth. Viessmann Climate Solutions has experienced over 15% compounded annual growth rate since 2020, with double-digit growth expected to continue through 2030.
Carrier will also gain new capabilities that expand its comprehensive renewable offerings and strengthen its differentiated, digitally enabled lifecycle solutions. Viessmann Climate Solutions offers renewable energy capabilities, home battery storage, smart home system controls, and digital offerings that expand Carrier's subscription and aftermarket offerings.
Planned Exit of Fire & Security and Commercial Refrigeration Businesses
Carrier plans to exit its Fire & Security and Commercial Refrigeration businesses in 2024. The exits will bring greater focus to Carrier's strategy and portfolio while benefiting the businesses' customers and employees. Carrier expects to use proceeds from any separation transaction to reduce leverage and repurchase equivalent shares issued to the Viessmann family.
Viessmann Climate Solutions Transaction Details and Financial Benefits
Carrier will acquire Viessmann Climate Solutions for €12 billion, subject to working capital and other adjustments. The Viessmann family has agreed to certain long-term lock-up provisions with respect to its equity ownership of Carrier common stock, reflecting their confidence in Carrier's growth and value creation.
Carrier expects to maintain its investment-grade credit rating at the close of the Viessmann Climate Solutions acquisition and return to its pre-transaction leverage profile within approximately two years. Financial benefits of the acquisition include enhanced top-line and EBITDA growth, accretive adjusted EPS by year two, increased aftermarket and recurring revenue growth profile, meaningful synergies, and reduced complexity.
Viessmann Deal Faces Government Scrutiny
Finalizing the aquisition will face obstacles, however. According to The New York Times, Viessmann is considered one of Germany’s small and midsize manufacturers, known as the Mittelstand companies, that make niche industrial products. Many of them are family-owned, and Viessmann’s decision to sell to a foreign manufacturer is "a rare move that set off questions in Germany." Robert Habeck, Germany’s economy minister, said that his ministry would review the deal, calling the measure routine for any acquisition of comparable size. Under German regulation, investments by a foreign company that would acquire more than 25% of shares will prompt a review by the German government and are decided on a case-by-case basis. While Habeck rejected suggestions of security concerns related to Carrier or its foreign ownership, he stressed the importance of ensuring that Germany remained competitive in the renewable energy sector, which the government views as a key element to economic growth.
Under the terms of the deal, the Times reported, Viessmann will have a seat on Carrier’s board. It will also require Carrier to maintain the heating unit’s headquarters in Allendorf for at least the next 10 years, while R&D sites must remain in Allendorf for at least five years.
Analyst/Investor Conference Call and Webcast
Carrier will host a conference call on April 26 at 7:30 a.m. ET to discuss the acquisition and its first quarter 2023 results. A live webcast of the conference call and associated presentation materials will be available on the Events & Presentations section of the Carrier Investor Relations site