Brookfield and CDPQ to acquire Johnson Controls’ Power Solutions business for US $13.2B

CPE Media News (11/13/2018) – Brookfield Business Partners L.P. (NYSE: BBU; TSX: BBU.UN) and Caisse de dépôt et placement du Québec (CDPQ) have agreed to acquire 100% of the Power Solutions business of Johnson Controls International plc (NYSE: JCI) for approximately US $13.2 billion (all figures in US dollars).

The transaction will be funded with approximately $3 billion of equity and approximately $10.2 billion of long-term debt financing.

Brookfield and CDPQ each will commit to fund approximately 30% of the equity on closing, and the balance will be funded by Brookfield’s institutional partners.

Johnson Controls’ Power Solutions business produces batteries for global automakers and aftermarket distributors and retailers for use in nearly all types of vehicles, including hybrid and electrical models.

Subject to customary closing conditions including regulatory approvals, the transaction is expected to close by June 30, 2019.

photo credit: Johnson Controls’ Power Solutions

News Release

BROOKFIELD BUSINESS PARTNERS IN PARTNERSHIP WITH CDPQ TO ACQUIRE POWER SOLUTIONS BUSINESS FROM JOHNSON CONTROLS

NOVEMBER 13, 2018 – Brookfield Business Partners L.P. (NYSE:BBU) (TSX:BBU.UN) (“Brookfield Business Partners”) together with institutional partners (collectively, “Brookfield”) and Caisse de dépôt et placement du Québec (“CDPQ”), today announced that they have reached an agreement whereby Brookfield and CDPQ will acquire 100% of Johnson Controls’ Power Solutions business (“the Business”) for approximately $13.2 billion.

“We are excited to grow our business with the acquisition of Power Solutions, a global market leader which generates consistent cash flows and profitability,” said Cyrus Madon, CEO, Brookfield Business Partners. “We look forward to partnering with the management team to continue growing this worldclass business and build on its track record of innovation.”

“We are very pleased to partner with Brookfield, that shares our vision of value creation through longterm commitment,” commented Stéphane Etroy, Executive Vice-President and Head of Private Equity at CDPQ. “This transaction enables us to acquire not only the world leader in automotive batteries, but also a model in terms of environmental and health & safety measures, that runs one of the most efficient industrial recycling systems globally.”

Business Overview

The Business produces batteries for global automakers and aftermarket distributors and retailers for use in nearly all types of vehicles, including hybrid and electrical models.

Highlights:

Market Leading Business with Strong Competitive Position. The Business is the market leader in automotive batteries, with significant global reach and market share in both original equipment manufacturers and aftermarket channels. It is well positioned to benefit from growth in demand for advanced batteries in all vehicle powertrains including electric vehicles.

Durable Business with Stable Cash Flows. The Business generates stable cash flows driven by noncyclical aftermarket sales which comprise approximately 75% of its profit. Its position as a low-cost producer in its core markets has enabled consistent growth through business cycles.

Long-Standing Relationships with Diverse Customer Base. The Business holds long-term relationships with top-tier original equipment manufacturers and auto retailers globally, which are served by its more than 15,000 employees in 150+ countries.

Reputation for Safety, Product Quality, and Performance. Through its 100+ year history, the Business has earned a reputation for strong environmental health and safety standards, including a differentiated closed loop recycling program, and best-in-class product quality and distribution, supporting improved performance and reliability for its customers.

Funding
The transaction will be funded with approximately $3 billion of equity and approximately $10.2 billion of long-term debt financing.

Brookfield Business Partners expects to fund approximately 30% of the equity on closing from existing liquidity. CDPQ will commit to fund approximately 30% of the equity on closing, and the balance will be funded by other institutional partners. Prior to or following closing, a portion of Brookfield Business Partners’ commitment may be syndicated to other institutional investors.

Advisors

Financing will be led by a syndicate of banks including Barclays, Credit Suisse, JPMorgan Chase, BofA Merrill Lynch, BMO Capital Markets, CIBC Capital Markets, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, RBC Capital Markets, The Bank of Nova Scotia and TD Securities, who are each (other than Barclays) also acting as financial advisors to Brookfield.

Davis Polk & Wardwell LLP is acting as lead deal counsel to Brookfield. In addition, Baker McKenzie is providing non-US legal advice, Cahill Gordon & Reindel LLP is providing compliance advice and Weil, Gotshal & Manges LLP is providing consortium advice to Brookfield. Kirkland & Ellis is acting as legal counsel to CDPQ.

Transaction Process

Closing of the transaction remains subject to customary closing conditions including regulatory approvals. Closing is expected to occur by June 30, 2019.

* * * * * *

Brookfield Business Partners is a business services and industrials company focused on owning and operating high-quality businesses that benefit from barriers to entry and/or low production costs. Brookfield Business Partners is listed on the New York and Toronto stock exchanges. Important information may be disseminated exclusively via the website; investors should consult the site to access this information.

Brookfield Business Partners is the flagship listed business services and industrials company of Brookfield Asset Management Inc. (NYSE: BAM)(TSX: BAM.A)(EURONEXT: BAMA), a leading global alternative asset manager with more than $300 billion of assets under management.

Caisse de dépôt et placement du Québec (CDPQ) is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As at June 30, 2018, it held CA$308.3 billion in net assets. As one of Canada’s leading institutional fund managers, CDPQ invests globally in major financial markets, private equity, infrastructure, real estate and private debt. For more information, visit cdpq.com, follow us on Twitter @LaCDPQ or consult our Facebook
or LinkedIn pages.

For more information, please visit our website at https://bbu.brookfield.com or contact:

Media Brookfield:
Claire Holland
Tel: (416) 369-8236
Email: claire.holland@brookfield.com

Media CDPQ:
Cesaltine Gregorio
Tel: +1 514 847-5493 / +1 212 596 6314
Email: cgregorio@cdpq.com

Investors Brookfield:
Gwyn Hemme
Tel: (416) 359-8632
Email: gwyn.hemme@brookfield.com

CPE Media News

Private Capital Journal, a service of CPE Media News, provides Canada's complete private capital (angel, venture capital, private equity, private/exempt), public financing, M&A, IPO/RTO news and intelligence.