Bloomberg News

Johnson Controls Auto M&A on Hiatus for Now, Finance Chief Says

June 27, 2011

June 27 (Bloomberg) -- Johnson Controls Inc., the largest U.S. auto supplier, said it’s putting automotive acquisitions on hold while integrating three recent purchases totaling more than $1.2 billion.

“We need time to digest that,” Chief Financial Officer Bruce McDonald said in an interview at the company’s headquarters in Milwaukee. “On the auto side of the business, we’re probably on little bit of a hiatus for the next, say, year.”

Johnson Controls has bought three companies to boost its automotive seating business since McDonald said in October that executives would focus on auto-parts acquisitions. Now the focus will likely shift to deals to support its building-efficiency unit, McDonald said.

The seating and interiors unit had sales of $16.6 billion last year, comprising 48 percent of Johnson Controls’ $34.3 billion in revenue. The efficiency business, which includes controls and services for air-conditioning and security in commercial buildings, had 2010 revenue of $12.8 billion. The battery unit, the smallest, accounted for 14 percent of the company’s sales and about 38 percent of pretax profit.

Since October, Johnson Controls has acquired Michel Thierry SA, a maker of seat fabric; C Rob Hammerstein Group, a maker of metal seat frames; and Keiper and Recaro Automotive.

Johnson Controls tried to buy part of Visteon Corp.’s interiors and electronics businesses before Visteon emerged from bankruptcy proceedings Oct. 1. McDonald said today his company is no longer interested in acquiring Visteon and hasn’t had discussions since that company emerged from bankruptcy.

“We were only interested in a portion,” he said. “To buy a portion you have to have a willing seller.”

Johnson Controls rose 35 cents to $39.52 at 4 p.m. in New York Stock Exchange composite trading. The company’s shares have risen 3.5 percent so far this year.

--Editors: Kevin Miller, Bill Koenig

To contact the reporter on this story: Mark Clothier in Detroit at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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