Johnson Controls nears deal to sell its battery division, which operates seven facilities in Mexico
Johnson Controls International is close a deal to sell its car batteries business to Brookfield Asset Management Inc for between US$ 13 billion and US$ 14 billion, Reuters reported citing anonymous sources familiar with the matter.
Johnson Controls’ power solutions division manufactures batteries of the Varta, Heliar, LTH, MAC, Optima and Delkor brands. Its products are used in about a third of cars globally, according to the report.
In Mexico, the unit operates four manufacturing facilities and two recycling centers in the states of Nuevo Leon, Guanajuato and Coahuila. In the state of Nuevo Leon, it also operates a laboratory and corporate offices.
In fact, one of those sites, a 255,772 square feet plant located in the municipality of Ciénega de Flores, which produces more than 2 million batteries per year, received the 2016 Best Plant Award by IndustryWeek.
Conservative estimates place the company’s annual output capacity in Mexico above 25 million batteries. Its global capacity is about 154 million.
The transaction would allow Johnson Controls to focus on its building technologies and solutions business, which manufactures heating, ventilation and air conditioning systems, building access controls and fire detection systems.
Brookfield, a Toronto-based investment firm with over US$ 285 billion in assets under management, outbid its rival Apollo Global Management LLC, headquartered in New York city, in an auction for the power solutions unit, although there’s still chance the negotiations could derail, according to Reuters sources.
In early October, General Motors filed a federal lawsuit against Johnson Controls, claiming the Milwaukee-based manufacturer owes the automaker more than US$ 28 million in warranty claims, the Detroit Free Press reported.
GM said the company failed to cover costs associated with batteries for GM model year 2014-16 vehicles. According to the report, Johnson Controls batteries were used in at least 34 Chevrolet, Buick, GMC and Cadillac models during that time.
In a statement, Johnson Controls claimed it has fully complied with all of its contractual obligations to General Motors and intend to continue to do so in the future. “While we truly value our long-term relationship and partnership, we intend to defend the case vigorously,” the document added.
“The suit follows a number of settlement agreements, which GM said the company failed to honor,” says the Free Press.