Brookfield in talks to buy power solutions unit of Johnson Controls

Brookfield Asset Management Inc., a Toronto-based Asset management company, is reportedly nearing a deal to purchase the power solutions business of Johnson Controls International plc – an Ireland-based automotive parts and HVAC company.

Reports cite, the acquisition would be this year’s biggest leveraged buy-outs and would allow Johnson Controls to shift its focus specifically on expanding its technologies & solutions business which is involved in manufacturing ventilation, air conditioning and heating systems, as well as producing fire detection and access control systems.

According to a report by Bloomberg, the transaction could fetch Johnson Controls over $12 billion. The company, back in March, had hired Centerview Partners to carry out a sale process for its power solutions unit. In anticipation of the deal, Johnson Controls’ shares jumped as much as 4% in New York trading at the beginning of the week, while Brookfield shares dropped 0.8%.

At the auction for the sale of the power solutions unit, Brookfield, with an approximately $285 billion of assets under management, made a buyout offer that was bigger than the bid made by the competing Apollo Global Management LLC.

Brookfield, Apollo and Johnson Controls reportedly refused to make a comment as the matter is still confidential. Reliable reports cite, the Toronto-based Brookfield would be purchasing Johnson Controls’ business of auto batteries, which includes the LTH, Heliar, Varta, Optima, Delkor and MAC brands.

For the record, the power solutions business of Johnson Controls, which manufactures and distributes around 154 million lead-acid batteries for light trucks and passenger cars annually, carries higher margins. However, the business has been capital intensive for the company.

Sources familiar with the matter claim, both firms could finalize the terms of the deal by the end of the week. However, they also commented that as the terms of the deal have not been finalized yet, chances are the discussions could end unsuccessfully.