MILWAUKEE (March 23, 2005) — Johnson Controls Inc. has signed a non-binding letter of intent to acquire Delphi Corp.'s global automotive battery business for approximately $212.5 million, subject to adjustments.
In conjunction with the acquisition, Johnson Controls also anticipates it will receive a global long-term contract to supply General Motors (GM) Corp. with original equipment batteries.
According to the agreement, the acquired Delphi business—which has annual consolidated revenues of approximately $600 million—would include its battery operations in more than 10 countries, including joint venture interests in China and South Korea. The company's U.S. automotive battery manufacturing locations are not included in the transaction.
Johnson Controls said Delphi will supply batteries from its New Brunswick, New Jersey and Fitzgerald, Ga., operations through a contract manufacturing relationship with Johnson Controls during a transitional period through 2007.
The acquisition enables Johnson Controls to participate in the rapidly growing Asian automotive battery market, particularly in China, the company said. The total vehicle population in China is expected to double in the next five years, with new-car production expected to grow at double-digit rates. The business being acquired has a leading position in OE batteries in China, as well as a presence in the Chinese aftermarket.
“We expect that this acquisition will enable us to extend our technology and grow our business globally, develop a leadership position in Asia and become the primary supplier of original equipment batteries to the world's largest auto maker,” said Gregg Sherrill, vice president of Johnson Controls' automotive group-battery. “We're very pleased about the potential these opportunities provide, and look forward to delivering our world-class quality and service to General Motors, and new original equipment and aftermarket customers around the world.”
The transaction is expected to close this summer, subject to satisfactory completion of due diligence procedures, negotiation and execution of a definitive acquisition agreement, receipt of necessary regulatory approvals, and a supply contract with GM.
Johnson Controls manufactures and distributes more than 80 million batteries annually and is the world's largest producer of power-storage devices for passenger vehicles and other applications.