Global technology, engineering, and industrial software company Emerson announced today an agreement to sell a majority stake in its heating, air conditioning and refrigeration business unit, Climate Technologies, to alternative investment manager Blackstone, in a deal valuing the business at $14 billion.
In a statement announcing the deal, Joe Baratta, Global Head of Blackstone Private Equity, pointed out the growth opportunities from the business arising from residential and commercial decarbonization initiatives.
Baratta said:
“The business is poised for accelerated growth as it leads the way in helping consumers and businesses shift to more energy-efficient heating and cooling products as part of their carbon reduction efforts.”
HVAC and cold chain technologies are playing an increasingly central role in the global movement to address and reduce greenhouse gas (GHG) emissions. Buildings are a significant contributor to global GHG emissions, and one of the hardest to replace, given their long-term nature. Overall, buildings are estimated to contribute to about 15% of global carbon emissions, with heating and cooling representing about 35% of that. Several major initiatives have been launched to address emissions derived from the built environment, including a proposed rule in the EU requiring all new buildings to be net zero by 2030, and a multi-billion dollar plan by the Biden administration to reduce emission from 300,000 government buildings.
Under the terms of the new agreement, Emerson will retain a 45% common equity stake in the Climate Technologies unit, and will receive upfront, pre-tax cash proceeds of approximately $9.5 billion and a note of $2.25 billion. The unit includes the Emerson’s Copeland compressor business and its entire portfolio of products and services across all HVAC and refrigeration end-markets, representing annual revenues of approximately $5.0 billion.
Baratta added:
“We are thrilled to back the business’ dedicated team as they continue to innovate and deliver energy-efficient solutions to their customers.”
Earlier this year Blackstone stated that it sees an opportunity to invest an estimated $100 billion in energy transition and climate change solutions projects over the next decade.
The post Blackstone Cites Decarbonization-Driven Growth in Deal for Emerson’s $14 Billion HVAC & Refrigeration Business appeared first on ESG Today.