Daikin Industries Ltd, the world’s largest air-conditioner maker, agreed to acquire US competitor Goodman Global Inc for US$3.7 billion to expand in North America.
The companies and Goodman’s owner, Hellman & Friedman LLC, signed an agreement yesterday under which Daikin is to buy all of the closely held company’s stock, the companies said in a statement. The transaction will be completed in the fourth quarter, pending regulatory approval, they said.
The deal gives Osaka, Japan-based Daikin a network of more than 900 distribution points in North America and allows it to enter the market for ducted-style, central air-conditioning, known as HVAC, in North America, it said in the statement. Daikin is to pay for the acquisition with a combination of funds including bonds and loans, and said it does not plan to sell stock.
“North America is the largest global HVAC market and most systems in this market are ducted-style, a segment where we have little presence,” Daikin CEO Noriyuki Inoue said at a press conference in Osaka yesterday.
The deal will also help Daikin expand in “emerging and high-volume markets,” he said.
Daikin fell 3.5 percent, the most since Aug. 1, to close at ￥2,073 in Tokyo trading.
The Japanese company plans to borrow most of the funds for the purchase from the Japan Bank for International Cooperation, a government-owned lender, a person familiar with the matter said earlier. Daikin plans to take advantage of the bank’s “emergency facility to counter the strong yen,” it said in the statement.
Negotiations for the acquisition date back to 2010, and the talks broke off last year, with Daikin citing economic conditions following Japan’s earthquake and tsunami in March last year.
Daikin plans to invest further in Goodman, which will continue to be managed as an independent business and keep its current management, according to yesterday’s statement. The US company has more than 4,500 employees and generated US$2.1 billion in sales last year, a majority of it in North America, it said.
“This is an opportunity for Goodman to grow globally as well as in the North American market by leveraging Daikin Group’s technical expertise, environmental technologies and North American commercial expertise,” David Swift, chief executive officer of Houston-based Goodman, said at the press conference in Osaka.
Daikin had ￥1.22 trillion of sales in the year ended March and employs more than 44,000 people globally, with manufacturing and sales in more than 90 countries, it said.
Daikin generates 10 percent of its revenue in the Americas, according to data compiled by Bloomberg. Air conditioning accounts for 85 percent of its global sales, according to the data.
Founded in 1924, Daikin began as a manufacturer of aircraft radiator tubes and fluorine refrigerants, entering the air-conditioning business in 1951, according to the company.