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Johnson Controls (JCI) to Sell Scott Safety Business to 3M
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Johnson Controls International plc (JCI - Free Report) has signed a definitive agreement to sell its Scott Safety business to 3M for $2 billion in an all-cash deal. The purchase price is almost 13 times Scott Safety's trailing 12-month EBITDA. The transaction is expected to close by the second half of 2017, subject to customary closing conditions including required regulatory approval.
Johnson Controls considers that the sale will be mutually beneficial for both the companies. Johnson Controls will now focus on its two core platforms of Buildings and Energy and expects this to lead to CAGR growth of 12% to 15% in earnings per share by fiscal 2020.
Scott Safety is a leader in the fire safety solutions market. The company has its headquarter in Monroe, NC, and employs around 1,500 workers globally.
On a trailing 12-month basis, sales from Scott Safety was around $570 million and earnings before interest, taxes, depreciation and amortization was approximately $155 million. Johnson Controls will offset the dilution from this transaction through share repurchase in fiscal 2017.
Johnson Controls expects net cash proceeds from this transaction in the range of $1.8 billion to $1.9 billion. The company will utilize the funds to repay a portion of Tyco International Holding Sarl's $4.0 billion debt related to the merger.
Johnson Controls underperformed the Zacks categorized Industrial Products-Services industry in the last three months. During this period, the company’s share price dropped 1.2%, while the industry saw a 1.5% increase. The company recently completed the spin-off of its Automotive Interiors business into an independent company, Adient. Meanwhile, the deconsolidation of the business and negative currency translation has been hurting its sales.
Zacks Rank & Key Picks
Johnson Controls currently carries a Zacks Rank #3 (Hold).
For the current year, American Axle, Lear and Honda expect earnings growth of around 8.1%, 8.9% and 26%, respectively.
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Johnson Controls (JCI) to Sell Scott Safety Business to 3M
Johnson Controls International plc (JCI - Free Report) has signed a definitive agreement to sell its Scott Safety business to 3M for $2 billion in an all-cash deal. The purchase price is almost 13 times Scott Safety's trailing 12-month EBITDA. The transaction is expected to close by the second half of 2017, subject to customary closing conditions including required regulatory approval.
Johnson Controls considers that the sale will be mutually beneficial for both the companies. Johnson Controls will now focus on its two core platforms of Buildings and Energy and expects this to lead to CAGR growth of 12% to 15% in earnings per share by fiscal 2020.
Scott Safety is a leader in the fire safety solutions market. The company has its headquarter in Monroe, NC, and employs around 1,500 workers globally.
On a trailing 12-month basis, sales from Scott Safety was around $570 million and earnings before interest, taxes, depreciation and amortization was approximately $155 million. Johnson Controls will offset the dilution from this transaction through share repurchase in fiscal 2017.
Johnson Controls expects net cash proceeds from this transaction in the range of $1.8 billion to $1.9 billion. The company will utilize the funds to repay a portion of Tyco International Holding Sarl's $4.0 billion debt related to the merger.
Johnson Controls International PLC Price
Johnson Controls International PLC Price | Johnson Controls International PLC Quote
Price Performance
Johnson Controls underperformed the Zacks categorized Industrial Products-Services industry in the last three months. During this period, the company’s share price dropped 1.2%, while the industry saw a 1.5% increase. The company recently completed the spin-off of its Automotive Interiors business into an independent company, Adient. Meanwhile, the deconsolidation of the business and negative currency translation has been hurting its sales.
Zacks Rank & Key Picks
Johnson Controls currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the auto space include American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) , Lear Corporation (LEA - Free Report) and Honda Motor Co., Ltd (HMC - Free Report) . While Lear sports a Zacks Rank #1 (Strong Buy), Honda and American Axle carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
For the current year, American Axle, Lear and Honda expect earnings growth of around 8.1%, 8.9% and 26%, respectively.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>