Johnson Controls to Acquire Delphi’s Auto Battery Business
Johnson Controls Inc. (Milwaukee, WI) 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. Additionally, in conjunction with the acquisition, Johnson Controls anticipates receiving a global long-term contract to supply General Motors Corp. with original equipment batteries.
The business to be acquired, which has annual consolidated revenues of approximately $600 million, would include Delphi’s battery operations in more than 10 countries, including joint venture interests in China and South Korea. Delphi’s US automotive battery manufacturing locations are not included in the transaction. Delphi will supply batteries from its New Brunswick, NJ, 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 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 original equipment batteries in China, as well as a presence in the Chinese aftermarket.
The transaction is expected to close in the summer of 2005, 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 General Motors.