Glendale-based Johnson Controls Inc. confirmed it has reached an agreement to sell its Global WorkPlace Solutions business to the CBRE Group for $1.5 billion.
Johnson Controls last year announced it would be divesting the division to focus on its core operations. Earlier this month, several media outlets reported on the impending deal, citing people “familiar with the matter.”
The deal includes a 10-year strategic relationship between CBRE and Johnson Controls. The global multi-industrial company will serve as the real estate management firm’s preferred HVAC equipment, building automation system and related services provider. CBRE Group will now manage a 5 billion-square-foot real estate and corporate facilities portfolio. As a result, Johnson Controls expects to generate up to $500 million in annual incremental revenue for its Building Efficiency business. CBRE will also provide a full suite of integrated corporate real estate services for 50 million square feet of Johnson Controls properties.
Also included in the agreement is a plan for the companies to provide a total of $40 million over the 10-year partnership to finance an energy management solutions innovation lab, which aims to create value for occupiers of and investors in real estate.
“This agreement with CBRE is a great step for both companies that will allow each of us to build upon our core strengths to create new sources of value for our customers,” said Alex Molinaroli, chairman and chief executive officer of Johnson Controls. “GWS is a natural fit with CBRE’s offerings, and together they will strategically take the business forward. In addition, the new strategic partnership provides another new, strong channel for Johnson Controls to serve CBRE and its clients around the world with our full portfolio of buildings technologies and services.”
“This agreement is much more than a transaction,” he said. “It reflects our commitment to grow our buildings business, and is a long-term arrangement with significant mutual value and a strategic partnership that will drive sustainable growth for both companies.”
Johnson Controls also sold its interests in two Global WorkPlace Solutions joint ventures to Brookfield Asset Management Inc. In total, the proceeds of the GWS business divestitures are $1.7 billion.
“The exceptionally talented GWS team will greatly enhance our service offering for occupiers around the world,” said Bob Sulentic, president and chief executive officer of CBRE. “With GWS, we further our ability to create advantages for occupier clients by aligning every aspect of how they lease, own, use and operate real estate to enhance their competitive position.”
The transaction is expected to close in Johnson Controls’ fiscal fourth quarter, which ends in October.