Samsung Elec vies for Johnson Controls' HVAC units

Samsung Electronics Co. has joined the race to buy Johnson Controls International’s heating, ventilation and air conditioning (HVAC) assets worth over $6 billion, according to a Reuters report.

If clinched, it would mark the world's No. 1 memory chipmaker's first buyout deal in seven years and spur its advance into the HVAC market, expected to grow rapidly in the coming decades.

South Korea's most valuable company is among the bidders for the businesses, along with Robert Bosch and Lennox International. Any deal would be months away, considering that other bidders could emerge, the report said last week.

Johnson Controls has been working with its advisors to sell its residential and light commercial businesses, including a US business and a 60% stake in an air-conditioning venture with Japan’s Hitachi, called Johnson Controls-Hitachi Air Conditioning, it added.

The report came less than a week after Han Jong-hee, chief executive of Samsung Electronics said at an annual general shareholder meeting that the company has made significant progress on a new M&A deal and would share the details with shareholders soon.

If Samsung takes over the HVAC businesses from Johnson Controls, which produces HVAC, fire and security equipment for buildings, it would mark its first acquisition deal following the $8 billion purchase of the US-based Harman International in 2017 as its wholly owned subsidiary.

Harman produces connected car systems, audio and visual products and enterprise automation solutions.

HVAC refers to the systems that regulate and move heated and cooled air throughout buildings.

OTHER M&A TARGETS

Sitting on cash reserves of 79.7 trillion won ($60 billion) at the end of 2023, Samsung has been seeking new M&A targets.

It is rumored to be looking into buying the automotive electronics business of Continental AG, a German automotive parts maker.

Back in 2022, its attempt to acquire ARM Inc., a British chip designing firm, fell through. The same year, it was said to have checked out NXP Semiconductors, a Dutch chip designer and Infineon Technologies’ automotive electronics business for acquisitions.

Its bid for Johnson Controls’ HVAC businesses also comes after Jay Y. Lee, chairman of Samsung Electronics, was cleared of wrongdoing charges in a Seoul district court in February.

Samsung is lagging behind local archrival LG Electronics Inc. in the HVAC segment.

LG has been growing its HVAC business as one of its core pillars. It aims to double sales for its HVAC systems with more focus on North America and Europe, which together account for 37% of the global HVAC market.

The HVAC market is forecast to grow to $61 billion by 2028 from $58.4 billion in 2023, according to IBISWorld, a research company.

Write to Chae-Yeon Kim at Why29@hankyung.com

Yeonhee Kim edited this article.