Bosch wants to take over a competitor’s heating and air conditioning business for more than seven billion euros. That would be the largest purchase in the company’s history. There are strategic goals behind this.
Bosch is going all out: The technology group wants to position itself better worldwide in the heat pump and air conditioning business – and is investing billions to do so. As the group from Gerlingen near Stuttgart announced, it plans to take over the heating, ventilation and air conditioning solutions business for residential and small commercial buildings from the Irish building technology group Johnson Controls.
Largest transaction in Bosch history
As part of the takeover, Bosch also plans to acquire a joint venture between Johnson Controls and the Japanese industrial group Hitachi. The purchase price totals eight billion US dollars, or around 7.4 billion euros. “We can finance these transactions entirely from our own resources,” said Bosch CEO Stefan Hartung.
The shareholders and the supervisory board of Bosch have approved the transaction, it said. The parties involved have signed binding agreements on the acquisitions. The takeover is expected to take place in twelve months – provided the authorities approve the deal.
According to Hartung, the acquisition is the largest transaction in the company’s almost 140-year history. By comparison, Bosch says its next smallest acquisition was made almost ten years ago. At that time, the company took over half of the household appliance manufacturer BSH from Siemens and thus became the sole owner of the company. The purchase price at the time was three billion euros.
Acquisition strengthens market position in the USA and Asia
The businesses that Bosch now wants to buy generated sales of around four billion euros in the 2023 fiscal year. Around 12,000 people were employed there. The transaction includes 16 production facilities and 12 development sites in more than 30 countries. Around 90 percent of sales were generated in the USA and Asia. The acquisition will strengthen the company’s presence in these regions, said Hartung.
“This will open up further growth opportunities and make the entire company even more robust,” said Hartung. The manager had already indicated several times in recent weeks that he wanted to strengthen Bosch with strategic acquisitions.
Bosch sees growth opportunities
Bosch expects a lot of potential for growth in the heating, ventilation and air conditioning market: The company assumes that the global market for products in this area will grow by 40 percent by 2030. The drivers for this are technological progress, the fight against climate change and new legal requirements.
Bosch sees itself as being well-positioned for this: The aim is to play an active role in shaping the growing market in energy and building technology and to take a leading position globally. To date, Bosch has been represented primarily in the heating market in Europe with its subsidiary Bosch Home Comfort Group – which also includes brands such as Buderus. The purchase will strengthen the air conditioning sector in particular. In addition, the group can now expand its heat pump business globally and thus achieve greater cost advantages.
The new business is to be integrated into the subsidiary, which was called Bosch Thermotechnik until 2023. The Home Comfort Group, with its administrative headquarters in Wetzlar, generated sales of around five billion euros last year with 14,600 employees. That was around a twentieth of the group’s sales of just over 91.6 billion euros. The subsidiary’s sales and number of employees would almost double after the purchase is completed.
Bosch cautious about annual targets
Bosch is known as the world’s largest automotive supplier, but also sells household appliances, power tools and heat pumps, among other things. The broad positioning – otherwise an advantage for the company – has recently become a disadvantage. Bosch is currently battling headwinds in almost all sectors.
The transition to electric motors and fuel cells is not happening as quickly as expected. It will therefore take some time before the billions invested in the transformation pay off. The sluggish global economy is also affecting many customers. They are holding back on buying devices such as cordless screwdrivers, washing machines and refrigerators.
In order not to jeopardize its competitiveness, Bosch is currently cutting costs and prioritizing investments. This includes personnel. Most recently, several thousand job cuts were being considered across the group. The traditional company is therefore also holding back on its annual targets. The goal is to achieve sales growth of five to seven percent.
Source: Stern
