Johnson Controls to sell Scott Safety business to 3M for $2 billion

SP&T Staff
Friday March 17, 2017
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Johnson Controls has signed a “definitive agreement” to sell its Scott Safety business to 3M in a cash transaction valued at about $2.0 billion, the company announced on Thursday.

Scott Safety designs and manufactures respiratory protection, gas and flame detection, thermal imaging and other products for fire services, law enforcement, industrial, oil & gas, chemical, armed forces, and homeland defense end markets. The business is headquartered in Monroe, N.C., with approximately 1,500 employees globally.

“We are pleased to announce the sale of Scott Safety to 3M in a mutually beneficial strategic transaction,” said Alex Molinaroli, Johnson Controls chair and CEO. “Consistent with our priority to focus the portfolio on our two core platforms of Buildings and Energy, we continue to execute on our strategic plan, which positions us to deliver a 12 per cent to 15 per cent earnings per share CAGR by fiscal 2020.”

On a trailing 12-month basis, Scott Safety generated sales of about $570 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $155 million. Johnson Controls says it plans to offset dilution from this transaction, including increasing its share repurchase program during the remainder of fiscal 2017, and will provide additional details during the quarterly earnings call to be held in April.

Net cash proceeds from the transaction are expected to be $1.8 to $1.9 billion, and will be used to repay a portion of Tyco International Holding Sarl’s $4.0 billion of merger related debt. The purchase price translates to approximately 13 times Scott Safety’s trailing 12-month EBITDA, according to Johnson Controls.

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