Target: HomeLink product line
Price: $700 million
Buyer: Gentex Corp
Seller: Johnson Controls Inc
Financial Adviser: JPMorgan Chase & Co
People familiar with the process said last month that Johnson Controls was speaking with private equity firms about the business after interest from rival auto parts suppliers faltered.
The sale of the HomeLink product line to Gentex Corp is expected to close around the end of September. Johnson Controls said it expects to announce the sale of the rest of the electronics business before its next earnings report.
Morgan Stanley analyst Ravi Shanker called the deal “a nice cherry on top of the quarter.” Since HomeLink accounts for about half the electronics unit’s total sales, the price on the deal is a good sign, given speculation that the entire unit would fetch $1 billion, he said.
Johnson Controls, the largest U.S. auto parts maker, said it separated HomeLink from the rest of the electronics business to get the best possible deal. HomeLink, a vehicle-based system that allows drivers to remotely activate garage door openers, entry door locks, home lighting, security systems and other products, has been integrated into Gentex products for more than a decade.
Gentex, which makes automatic-dimming rearview mirrors and camera-based lighting and driver-assist systems, said the deal would boost its annual revenue by $125 million to $150 million. In April, Johnson Controls said the potential sale of its auto electronics business was in the early stages. In March, it hired JPMorgan Chase & Co to run the sale process.
Johnson Controls also makes car interiors and batteries, and heating, cooling and ventilation systems for buildings. The company said net income rose 38 percent to $594 million, or 83 cents a share, in the fiscal third quarter ended June 30, from $431 million, or 63 cents a share, a year earlier.
Excluding one-time gains, Johnson Controls earned 78 cents a share in the latest quarter, 3 cents above the average estimate of analysts polled by Thomson Reuters I/B/E/S. Revenue rose 2.4 percent to $10.83 billion. Analysts had expected $11 billion.