Heating pump, climate equipment and so on. - Bosch reports Billions-deal in Building Technology
Bosch is expanding: The technology conglomerate from Gerlingen near Stuttgart, Germany, intends to strengthen its global position in the heating, ventilation, and air conditioning (HVAC) market for residential and small commercial buildings by acquiring Johnson Controls' HVAC business.
Largest Transaction in Bosch History
Bosch also plans to acquire a joint venture between Johnson Controls and Hitachi. The total purchase price amounts to eight billion US dollars, or approximately 7.4 billion Euro. "We can finance these transactions in full from our own resources," said Bosch CEO Stefan Hartung.
The shareholders and the supervisory board of Bosch have approved the acquisition, according to the announcement. The parties involved signed binding agreements regarding the acquisitions. The acquisition is expected to be completed in approximately twelve months, assuming regulatory bodies approve the deal.
The acquisition represents the largest transaction in Bosch's nearly 140-year history. For comparison: Bosch's next-largest acquisition occurred about ten years ago when the company acquired half of household appliance manufacturer BSH from Siemens, becoming the sole owner of the business. The purchase price at that time was three billion Euro.
Strengthening Market Position in the USA and Asia
The businesses Bosch intends to acquire generated a revenue of around four billion Euro in the fiscal year 2023. Approximately 12,000 people were employed there. The transaction includes 16 production sites and 12 research and development centers in over 30 countries. Around 90% of the revenue was generated in the USA and Asia. With the acquisition, Bosch aims to strengthen its presence in these regions, Hartung stated.
"We are opening up further growth opportunities and making the entire company even more robust," Hartung said. The manager had already hinted at strategic acquisitions in the previous weeks to strengthen Bosch.
Bosch sees growth opportunities
Bosch anticipates significant growth potential in the heating, ventilation, and air conditioning market: The company expects the global market for products in this sector to grow by approximately 40% by 2030. The drivers for this growth include technological advancements, the fight against climate change, and new regulatory requirements.
Bosch is positioning itself for this growth: The goal is to actively shape the growing market in the energy and building technology sector and take a leading global position. To date, Bosch, through its subsidiary Bosch Home Comfort Group (headquartered in Wetzlar), has been particularly active in the European heating market. The acquisition will primarily enhance the company's presence in the air conditioning sector. Additionally, Bosch can now expand its business with heat pumps globally and thus achieve better cost advantages.
The new business is expected to be integrated into the Bosch Thermotechnik subsidiary, which was previously called Bosch Home Comfort Group. The Wetzlar-based company, which employed 14,600 people last year and generated a revenue of around five billion Euro, accounted for roughly one-fifth of the group's total revenue of approximately 91.6 billion Euro. The sales and employment figures of the subsidiary are expected to nearly double after the acquisition is completed.
Bosch cautious with financial targets
Bosch is known as the world's largest automotive supplier, but it also sells household appliances, power tools, and heating systems. The broad product range - otherwise an advantage for the corporation - has recently become a disadvantage. Currently, Bosch is facing headwinds in almost all sectors.
The transition to electric motors and fuel cells is not progressing as quickly as anticipated. Before the billions of investments in the transformation can pay off, some time is required to pass. The global economic situation also affects many customers and clients. They are holding back on purchases of appliances such as vacuum cleaners, washing machines, and refrigerators.
To maintain competitiveness, Bosch is currently cutting costs and prioritizing investments. At the company level, a reduction of several thousand jobs was considered recently. The traditional corporation is therefore also holding back on its annual goals. An increase in sales of five to seven percent is targeted.
- Bosch will acquire Johnson Controls' HVAC business, aiming to enhance its position in the global HVAC market for residential and small commercial buildings.
- The total purchase price for the acquisitions, including a joint venture between Johnson Controls and Hitachi, is eight billion US dollars.
- The Bosch CEO, Stefan Hartung, confirmed that the acquisition can be fully financed from the company's own resources.
- The Johnson Controls HVAC business generated around four billion Euro in revenue and employed approximately 12,000 people in the fiscal year 2023.
- Bosch aims to strengthen its presence in the USA and Asia with the acquisition, as around 90% of the revenue was generated in these regions.
- Johnson Controls and Hitachi's joint venture includes 16 production sites and 12 research and development centers in over 30 countries.
- Bosch anticipates significant growth potential in the heating, ventilation, and air conditioning market, with expectations of a 40% increase by 2030.
- The acquisition will primarily boost Bosch's presence in the air conditioning sector and enable global expansion with heat pumps, improving cost advantages.
- The newly acquired business will be integrated into the Bosch Thermotechnik subsidiary, headquartered in Wetzlar, potentially nearly doubling the company's sales and employment figures.
