PALM BEACH GARDENS, Fla. - Carrier Global Corporation (NYSE: NYSE:CARR), a provider of climate and energy solutions, has reached a definitive agreement to sell its Commercial and Residential Fire business to an affiliate of Lone Star Funds. The transaction, announced today, is valued at an enterprise value of $3 billion.
This divestiture is part of Carrier's strategic transformation to focus on its core businesses and is expected to close by the end of 2024, pending regulatory approvals and customary closing conditions. The company's journey toward becoming a more streamlined entity has included the acquisition of Viessmann Climate Solutions earlier this year and the divestment of its Industrial Fire and Global Access Solutions businesses.
Carrier's Chairman & CEO, David Gitlin, expressed pride in the company's ability to execute all planned divestitures within approximately a year of their announcement, with a total value surpassing $10 billion. The deals have been completed at a mid-teens EBITDA multiple in aggregate.
Following the sale, Carrier anticipates using the estimated $2.2 billion in net proceeds towards share repurchases, consistent with its previous communications. This comes after the company has significantly reduced its net debt by over $5 billion through loan and note repayments, including a successful tender for additional outstanding debt last week.
Financial advisory for the transaction is provided by Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, with Paul, Weiss, Rifkind, Wharton & Garrison LLP and Linklaters LLP serving as legal counsel.
Carrier continues to position itself as a leader in intelligent climate and energy solutions, emphasizing its commitment to sustainability and innovation. Lone Star Funds, the acquiring entity, is a seasoned private equity firm with a history of investments across various sectors, including corporate equity, credit, and real estate.
This news is based on a press release statement from Carrier Global Corporation.
In other recent news, Carrier Global has experienced significant developments. BofA Securities upgraded Carrier Global's stock from Underperform to Neutral and raised the price target to $72, following the company's second-quarter adjusted earnings per share (EPS) of $0.87, which exceeded the consensus estimate. Despite a 30% drop in Viessmann's sales, robust North American HVAC demand has helped Carrier surpass earnings expectations. Furthermore, Carrier has initiated a share buyback program, which is expected to positively impact its earnings.
Simultaneously, Carrier has launched tender offers to purchase up to $800 million of its outstanding debt securities, as part of the company's financial strategy. This move aligns with Carrier's focus on managing its debt portfolio effectively.
Despite the underperformance of Viessmann, a key part of Carrier's business, Baird adjusted its price target for Carrier Global to $74 while maintaining an Outperform rating on the stock. This decision reflects Baird's confidence in Carrier's strategic moves, including portfolio reconfiguration and aggressive capital allocation.
Additionally, Carrier reported a 10% year-over-year increase in adjusted EPS to $0.87 and a 35% surge in free cash flow to $550 million in the second quarter. The company also announced plans for a multi-billion dollar share buyback and projected full-year sales to reach approximately $25.5 billion, with an adjusted EPS of $2.80 to $2.90.
These recent developments underscore Carrier's commitment to its transformation journey, with a focus on becoming a global leader in intelligent climate and energy solutions.
InvestingPro Insights
Carrier Global Corporation (NYSE: CARR) has been making strategic moves to streamline its operations, and the latest divestiture is a testament to its focus on core business areas. As Carrier positions itself for a future centered around climate and energy solutions, investors may find the following insights from InvestingPro particularly relevant:
Carrier has demonstrated a commitment to shareholder returns, evidenced by its consistent dividend growth over the past four years. This is a positive signal for income-focused investors, especially when considering the company's strategic divestitures aimed at enhancing capital allocation.
With a market capitalization of $59.29 billion and a P/E ratio of 16.87, Carrier trades at a valuation that balances its near-term earnings growth. This could suggest that the company is reasonably valued in the current market, which may appeal to value investors looking for established companies with growth potential.
Despite some analysts revising their earnings expectations downwards for the upcoming period, Carrier's operational performance remains robust, with a revenue growth of 8.63% over the last twelve months as of Q2 2024. This growth is coupled with a strong gross profit margin of 28.97%, reflecting the company's ability to maintain profitability in its operations.
For those considering Carrier as an investment, there are additional InvestingPro Tips available that could provide deeper insights into the company's financial health and market position. For instance, Carrier is noted for operating with a moderate level of debt and being a prominent player in the Building Products industry. To explore these and other insights, investors can visit InvestingPro where a total of 12 InvestingPro Tips are available to help inform investment decisions.
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