Carrier Announces Agreement to Sell Commercial and Residential Fire Business to an Affiliate of Lone Star Funds for $3 Billion

Rhea-AI Summary

Carrier Global (NYSE: CARR) has announced a definitive agreement to sell its Commercial and Residential Fire business to an affiliate of Lone Star Funds for an enterprise value of $3 billion. This sale marks a important step in Carrier's transformation into a focused, higher-growth company dedicated to sustainability. The deal is expected to close by the end of 2024, subject to regulatory approvals.

This divestiture is part of Carrier's broader portfolio transformation, which includes the recent acquisition of Viessmann Climate Solutions and divestitures of other businesses, totaling over $10 billion in combined value. Following these transactions, Carrier has reduced its net debt by over $5 billion. The company plans to use the estimated $2.2 billion in net proceeds from this sale for share repurchases.

Positive

• Sale of Commercial and Residential Fire business for $3 billion enterprise value
• Successful execution of all planned divestitures within about a year of announcement
• Combined value of divestitures exceeding $10 billion
• Net debt reduction of over $5 billion
• Plans to use $2.2 billion in net proceeds for share repurchases

Negative

• Divestiture of potentially profitable business segments

Insights

Financial Analyst

The sale of Carrier's Commercial and Residential Fire business for $3 billion is a significant strategic move. This divestiture, along with previous sales, totals over $10 billion at a mid-teens EBITDA multiple, indicating strong valuation. The company's focus on becoming a pure-play sustainability-oriented entity could potentially lead to higher growth rates and improved investor perception.

Carrier's aggressive debt reduction, cutting over $5 billion in net debt, strengthens its balance sheet. The plan to use $2.2 billion in net proceeds for share repurchases is likely to be viewed positively by the market, potentially supporting the stock price. However, investors should monitor how this transformation impacts Carrier's overall revenue and profitability in the coming quarters.

Market Research Analyst

Carrier's strategic pivot towards intelligent climate and energy solutions aligns with growing global demand for sustainable technologies. This move could position the company to capture a larger share of the rapidly expanding green technology market, estimated to reach $417.35 billion by 2030.

The divestiture of non-core businesses, including the fire safety segment, allows Carrier to streamline operations and focus resources on high-growth areas. This increased focus could lead to accelerated innovation and market share gains in the climate solutions sector. However, investors should consider the potential loss of diversification and how it might affect the company's resilience to economic cycles.

Legal Expert

The transaction's completion is subject to regulatory approvals, which introduces some uncertainty. Given the size and nature of the deal, it may face scrutiny from antitrust authorities. However, as this is a divestiture rather than an acquisition, it's less likely to raise significant competitive concerns.

Investors should note the expected closing timeline of end-2024, which suggests a relatively complex transaction. The involvement of top-tier financial advisors and law firms indicates thorough due diligence and structuring. While this provides some assurance, it's important to monitor any potential regulatory hurdles or delays that could impact the deal's completion and Carrier's transformation timeline.

PALM BEACH GARDENS, Fla., Aug. 15, 2024 /PRNewswire/ -- Carrier Global Corporation (NYSE: CARR), global leader in intelligent climate and energy solutions, entered into a definitive agreement today to sell its Commercial and Residential Fire business to an affiliate of Lone Star Funds for an enterprise value of $3 billion.

"The sale of our Commercial and Residential Fire business marks a defining step in our planned business exits critical to our transformational journey to becoming a focused, agile, higher-growth, pure-play company dedicated to creating a more sustainable world for generations to come," said Carrier Chairman & CEO David Gitlin. "I am so proud of what our deal and business teams have accomplished. We now have executed deals on all our divestitures, all signed within about a year of announcement, with a combined value of over $10 billion, representing a mid-teens EBITDA multiple in aggregate. This reflects tremendous dedication by so many, and I could not be more appreciative of our team's tireless efforts and great work."

The sale announced today marks a critical milestone in Carrier's portfolio transformation, following the acquisition of Viessmann Climate Solutions in January and the successful divestitures of its Industrial Fire and Global Access Solutions businesses. The Commercial Refrigeration sale is on track to close around the end of the third quarter. Closing of the Commercial and Residential Fire business is expected by the end of 2024, subject to regulatory approvals and customary closing conditions.

Following the acquisition of Viessmann Climate Solutions, Carrier has reduced its net debt by over $5 billion through the repayment of outstanding term loans and notes, including last week's successful tender for additional outstanding debt. As a result of significant de-leveraging this year, and consistent with prior messaging, Carrier expects to redeploy the estimated $2.2 billion in net proceeds from the transaction towards share repurchases.

Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are serving as financial advisor to Carrier. Paul, Weiss, Rifkind, Wharton & Garrison LLP and Linklaters LLP are providing external legal counsel.

About Carrier

Carrier Global Corporation, global leader in intelligent climate and energy solutions, is committed to creating solutions that matter for people and our planet for generations to come. From the beginning, we've led in inventing new technologies and entirely new industries. Today, we continue to lead because we have a world-class, diverse workforce that puts the customer at the center of everything we do. For more information, visit www.corporate.carrier.com or follow Carrier on social media at @Carrier.

About Lone Star

Lone Star is a leading private equity firm advising funds that invest globally in corporate equity, credit, real estate and other financial assets. Since the establishment of its first fund in 1995, Lone Star has organized 24 private equity funds with aggregate capital commitments totaling approximately $92 billion. The firm organizes its funds in three series: the Opportunity Fund series; the Commercial Real Estate Fund series; and the U.S. Residential Mortgage Fund series. Lone Star invests on behalf of its limited partners, which include institutional investors such as pension funds and sovereign wealth funds, as well as foundations and endowments that support medical research, higher education, and other philanthropic causes. For more information regarding Lone Star Funds, go to www.lonestarfunds.com.

Cautionary Statement

This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. These forward-looking statements are intended to provide management's current expectations or plans for Carrier's future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "scenario" and other words of similar meaning in connection with a discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to the sale of our industrial fire business, expected uses of the net proceeds therefrom, strategies or transactions of Carrier, Carrier's plans with respect to its indebtedness and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see Carrier's reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the U.S. Securities and Exchange Commission from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Carrier assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

CARR-IR

Contact:

Investor Relations
Sam Pearlstein
561-365-2251
Sam.Pearlstein@Carrier.com 

Media Inquiries
Rob Six
561-281-2362
Robert.Six@Carrier.com

 

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SOURCE Carrier Global Corporation

FAQ

What is the value of Carrier's sale of its Commercial and Residential Fire business?

Carrier (CARR) has agreed to sell its Commercial and Residential Fire business to an affiliate of Lone Star Funds for an enterprise value of $3 billion.

When is the Carrier (CARR) Commercial and Residential Fire business sale expected to close?

The sale of Carrier's Commercial and Residential Fire business is expected to close by the end of 2024, subject to regulatory approvals and customary closing conditions.

How much has Carrier (CARR) reduced its net debt following recent transactions?

Following the acquisition of Viessmann Climate Solutions and recent divestitures, Carrier has reduced its net debt by over $5 billion through the repayment of outstanding term loans and notes.

How does Carrier (CARR) plan to use the proceeds from the Commercial and Residential Fire business sale?

Carrier expects to redeploy the estimated $2.2 billion in net proceeds from the transaction towards share repurchases.