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| HVAC
INDUSTRY NEWS |
Daikin
acquires Goodman, a major residential HVAC player in
U.S., at the total value of $3.7 billion Expands
Geographic Reach of Daikin.
Daikin Industries, Ltd. (Daikin) passed a resolution
today at its Board of Directors meeting to acquire
Goodman Global Group, Inc. (Goodman). Daikin, Goodman,
and Goodman's major shareholder, Hellman & Friedman LLC
(H&F), signed a definitive agreement today regarding the
acquisition. Daikin, a leader in the heating,
ventilating and air-conditioning (HVAC) industry
headquartered in Osaka, Japan, is represented by its
Chairman and CEO, Noriyuki Inoue. Goodman, the leading
manufacturer and distributor in the U.S. residential
unitary HVAC (for air-conditioning the entire house)
sector headquartered in Houston, Texas, is represented
by its President and CEO, David L. Swift. H&F, a private
equity investment firm headquartered in San Francisco,
California, is represented by its Chairman, Brian M.
Powers.
In this acquisition, Daikin will purchase 100% of
Goodman's stock and the total acquisition value is 3.7
billion US dollars. The transaction, pending regulatory
approval, is expected to be completed during the fourth
quarter of 2012.
Goodman has a significant presence in the ducted-style
residential unitary HVAC segment in North America, a
segment where Daikin has little offerings. Goodman
generates strong financial performance through its low
cost US manufacturing operations and extensive network
of over 900 distribution points, of which 192 are
company operated.
Daikin is a comprehensive global HVAC manufacturer
offering extensive products, including ductless
air-conditioning and heat pump systems for residential
and commercial applications as well as large-sized HVAC
systems for buildings and factories. Through this
acquisition, Daikin will fully enter the ducted-style
air-conditioning market for residential and commercial
applications in North America. Daikin's sales are
expected to grow substantially with an outstanding and
complementary product portfolio covering not only ducted
and ductless air-conditioning systems but also furnace
and heat-pump systems in the world's largest HVAC
market. Daikin is a market leader delivering high
technology, environmentally-friendly and energy-saving
solutions to global HVAC customers.
Noriyuki Inoue, Chairman and CEO of Daikin said,
"Goodman is the best partner for Daikin in North America
as we aim to become the leading global HVAC
manufacturer. North America is the largest global HVAC
market and most systems in this market are ducted-style,
a segment where we have little presence. Goodman and
Daikin can enjoy a complementary relationship by having
more channels in the market to offer Goodman's market
leading ducted products and Daikin's existing products.
Daikin will also capitalize on Goodman's lean management
know-how to help us improve the earning power of the
entire Daikin Group and expand our business in emerging
and high volume markets globally."
"Goodman will allow us to serve a broader base of North
American customers along with McQuay International
(headquartered in Minneapolis, MN), which provides
solutions for medium to large HVAC customers, and Daikin
AC (Americas), Inc. (headquartered in Dallas, TX), which
provides ductless HVAC solutions. Together, Daikin will
gain the position of a very competitive North American
manufacturer with industry leading energy-saving
products and solutions ranging from residential to large
building systems."
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David L.
Swift, President and CEO of Goodman said, "This is an
opportunity for Goodman to grow globally as well as in
the North American market by leveraging Daikin Group's
technical expertise, environmental technologies, and
North American commercial expertise. With complementary
core businesses, we are in a very competitive position
to grow all segments of Goodman's and Daikin's business.
We look forward to a successful future as a part of a
winning team and are enthusiastic about creating more
opportunities to excel."
The combination of Daikin and Goodman will produce a
number of strategic benefits and general efficiency,
including:
1. Allow Daikin to enter the mainstream ducted-type
residential Unitary segment in North America and
establish a strong fourth pillar for Daikin's global
operations (i.e. Japan, China, Europe and North
America).
2. Grow
Goodman's business by introducing Daikin's energy saving
and power management technologies, such as remote
monitoring, into their value product offerings. These
technologies will also make significant contributions to
the environmental initiatives in the US residential HVAC
market.
3. Grow
Daikin's global business more efficiently by
transferring Goodman's low cost product know-how and
lean management expertise, especially in the area of
Supply Chain Management (SCM), into Daikin's global
operations. By utilizing Goodman's cost competitiveness,
Daikin will be able to target the high volume "value"
segment in many cost sensitive global markets. On the
other hand, Daikin believes that Goodman's ducted-style
products and the furnace heating equipment can be sold
through Daikin's global sales channels in more than 90
countries all over the world.
4. Grow
Daikin's ductless business in North America by gaining
access to Goodman's leading distribution network.
Funds for this acquisition will be raised through the
combination of internally generated funds, public policy
financing, straight bond issuances and bank loans to
ensure a stable long-term source of funding at low
interest rates. Daikin does not have any plans to issue
new stock. As for the public policy financing, Daikin
intends to take advantage of and utilize the initiative
of the Japan Ministry of Finance on "Emergency Facility
to Counter Strong Yen" announced on Aug. 24, 2011, which
is offered by the Japan Bank for International
Cooperation through private banks.
Goodman has expanded its business as a leader in the
North American residential market of ducted-style HVAC
system through its excellent management team and lean
operating structure. Goodman will continue to manage
itself as an independent business organization with its
current management team who will strive to maximize the
business expansion of both companies. Daikin intends to
maintain the independence of Goodman without a merger
into other existing organizations or a divestiture of
its businesses in the foreseeable future.
About Goodman
Goodman manufacturers and distributes ducted-style
unitary HVAC solutions for the residential and
commercial markets. The majority of their $2.1 billion
US dollar 2011 sales were in the North American market.
Goodman's more than 4,500 employees are primarily
located in Texas and Tennessee. After the acquisition is
completed, as new business opportunities are generated,
Daikin intends to invest in Goodman's business, which
can lead to an increase in job creation.
About Daikin
Daikin develops, manufactures, sells and provides
aftermarket support of HVAC equipment and systems,
refrigerants and other chemicals, as well as oil
hydraulic products. Consolidated sales for the fiscal
year ending March 2012 equaled 1,219 billion yen, with
net income of more than 41 billion yen. Daikin has more
than 44,000 employees globally and operates
manufacturing and sales activities in more than 90
countries.
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