Johnson Controls moves to strengthen building controls presence
MILWAUKEE--Johnson Controls made a move to increase its position within the heating, ventilation and air conditioning services market and deepen its integrated building systems platform through the acquisition of York International Corp., a York, Pa.-based supplier of HVAC and refrigeration systems products and services.
York manufactures HVAC equipment for residential, commercial and industrial environments. The company is strongly positioned in the industrial space and within the last 18 months has pushed in the commercial market. In the past, it has outsourced fire and security work to companies such as Johnson Controls.
By integrating York into its controls group division, the proposed $3.2 billion cash deal will increase that unit's annual revenue to $11 billion from $6 billion. The company forecasts fiscal 2005 sales to be approximately $28 billion. The acquisition is expected to close by the end of the year.
The North American HVAC controls market is a $600 million industry, according to Frost & Sullivan, and this market is expected to grow to more than $700 million by 2008. Johnson Controls is vying for market share in this space against firms such as General Electric, Honeywell and Tyco International.
Last summer, Schneider Electric paid $403 million for Andover Controls, Integral Technologies and Security International from Balfour Beatty. The deal was driven in large part to create an integrated building and life-safety platform, enabling customers a one-stop shopping experience.
"Fire and security is clearly how we excel" in the marketplace, said Monica Levy, executive director of brand and corporate communication at Johnson Controls. Through the merged company, greater opportunities to market such products will only increase, she said.
Johnson Controls supplies facility management and controls, such as control systems and services that feature comfort-, energy- and security management applications, and automotive systems, including integrated seating and interior systems and batteries.
"The combined company will be the largest service company in the world," said Helen Marsteller, vice president of investor relations at York. "We think the combination not only benefits shareholders, but employees and customers, as well."