Johnson Controls Inc., Hitachi Ltd. and Hitachi Appliances Inc. entered into a definitive agreement to form a global joint venture.
The agreement was formed while executives from the companies attended the World Economic Forum in Davos last week.
The new Johnson Controls-Hitachi joint venture will enable both companies to deliver the most diverse technology portfolio in the heating, ventilation, air conditioning and refrigeration industry.
Through the agreement, Glendale-based Johnson Controls will obtain a 60 percent ownership stake in Hitachi Appliances’ more than $2.6 billion global air conditioning business, excluding sales and service operations in Japan. The Johnson Controls-Hitachi joint venture will bring customers a full range of air conditioning products, including world-class variable refrigerant flow (VRF) technology, leading-edge inverter technology based room air conditioners and absorption chillers – on top of existing Johnson Controls products.
With approximately 13,800 employees and 24 manufacturing plants, the joint venture will build on both organizations’ technology, research and development leadership, as well as their expanding marketing channels. The transaction is expected to close later this year, subject to regulatory approvals and satisfaction of other customary conditions.
“For Johnson Controls, this partnership reflects our strategic commitment to our buildings business as a growth platform,” said Alex Molinaroli, chairman and chief executive officer of Johnson Controls. “The joint venture will propel us forward with superior products, enabling Johnson Controls to deliver the most diverse technology portfolio in the industry to meet customer demands across the changing global marketplace.”
The Johnson Controls-Hitachi joint venture management team will be led by Franz Cerwinka, chief executive officer. He has been with Johnson Controls for almost 20 years, having spent four years in Japan as vice president of finance for the Johnson Controls automotive business, including experience with more than 10 joint ventures.
Johnson Controls is a global multi-industrial company with 130 years of history in supplying heating, ventilation, air-conditioning, building controls, refrigeration and security systems for buildings. Through its Building Efficiency business, the company delivers solutions that increase energy efficiency and lower operating costs for over a million customers who are served through nearly 700 offices in more than 150 countries.
“The worldwide HVAC market is continuing to grow steadily, and the demand for energy efficient air conditioning systems with state-of-the-art technologies is expanding. As air conditioning systems are a key building block for building solutions, we believe this partnership will allow Hitachi and Johnson Controls to deliver the best solutions for our customers. Furthermore, in addition to air conditioning systems, we will be able to provide other building solutions that will enhance efficiencies throughout buildings, as well as surrounding areas,” said Hiroaki Nakanishi, chairman and CEO of Hitachi.
Hitachi Appliances will continue to provide Hitachi-branded HVAC products in the Japanese market after the transaction.
Also during the World Economic Forum last week, Johnson Controls was named to the Corporate Knights 2015 Global 100 Most Sustainable Corporations Index. This is the fifth time Johnson Controls, who was the only top sustainability performer in the auto components sector, has been honored since the list’s inception in 2005.
Companies named to the Global 100 index are the top overall sustainability performers in their respective industrial sectors, selected from a starting universe of 4,609 listed companies with a market capitalization greater than $2 billion. The Global 100 is determined using twelve quantitative sustainability indicators.