Samsung Electronics is reportedly pursuing the acquisition of Johnson Controls’ Heating, Ventilation, and Air Conditioning (HVAC) division with an investment of US$6 billion. This would mark the company’s first major merger and acquisition (M&A) since its US$8 billion acquisition of the automotive and audio company Harman in 2017, 8 years ago.
According to foreign media sources including Reuters on March 24 (local time), Samsung Electronics has entered a bidding war for the HVAC division of Johnson Controls, which is headquartered in Ireland. Competitors include HVAC specialists such as Bosch and Lennox. The acquisition price is mentioned to be US$6 billion.
Founded in 1885, Johnson Controls has made a name for itself in the HVAC industry, offering heating, cooling, and air purification systems and operating in over 2,000 cities. However, the company has put its HVAC division up for sale earlier this year to focus on its artificial intelligence (AI) smart building solutions business.
The HVAC market is gaining attention as demand for high-energy-efficient air conditioners rises with the growing trend towards decarbonization. Market research firm IBISWorld forecasts that the market size, currently at US$58.4 billion, will reach US$61 billion by 2028.
The market is led by Japan’s Daikin Industries and China’s Midea Group, among others, with Johnson Controls, Carrier, Panasonic, Samsung Electronics, and LG Electronics following closely behind. Despite Samsung Electronics’ move to expand into the HVAC business, including the acquisition of the American HVAC company Quietside in 2014, its presence in the global market remains minimal. Acquiring Johnson Controls would provide Samsung an opportunity to supply HVAC equipment not only for residential use but also for commercial buildings.
Industry insiders say that Samsung Electronics’ M&A department has become more active since the beginning of the year, with a focus on reviewing companies in the fields of automotive electronics, robotics, and biotechnology.