(JCI) Johnson Controls European Buyout Enhances

Johnson Controls Inc. (JCI) announced that it has completed the acquisition of two European business entities, Keiper recliner systems and Recaro seating business in Germany, after getting approval from the European Commission in Brussels, Belgium on June 17, 2011.

Keiper is a market leader in recliner system technology. It is renowned for its engineering and manufacturing expertise in metals and mechanisms for automobile seating systems. It will be closed in the third quarter of fiscal 2011. On the other hand, Recaro Automotive offers complete seating facilities for the original equipment manufacturers (OEMs) and aftermarket.

As part of the transaction, Johnson Controls will also acquire the licensing rights for the exclusive global use of the Recaro trademark for the automotive industry, excluding Recaro Aircraft Seating, Recaro Child Safety and Recaro Home, which will remain part of Putsch Holding in Kaiserslautern, Germany. The acquisition includes 4,750 employees at 13 locations across seven countries.

Johnson Controls has not disclosed terms of the transaction. However, it has revealed in a regulatory filing that it has agreed to buy Keiper and Recaro’s businesses as well as C. Rob. Hammerstein Group for a total of $950 million.

In December 2010, Johnson Controls signed an agreement to acquire C. Rob. Hammerstein Group (“CRH”), a Solingen, Germany-based manufacturer and global supplier of metal seat structures and mechanisms. CRH has operations in nine countries and has 3,600 employees across the world.

The CRH acquisition will help Johnson Controls to serve a completely different set of customers compared to ones it has been serving so far. It will facilitate growth particularly in China, Mexico, Turkey, Hungary and Romania.

The company will integrate CRH business into its metal and mechanisms unit, which is a part of its seating components group within the Automotive Experience business. Therefore, the acquisitions of Keiper, Recaro and C. Rob Hammerstein will help Johnson Controls become a global leader in seating components.

Johnson Controls Inc. is a supplier of automotive interiors, batteries, and other control equipment. In the most recent reportable quarter, the company has furnished 18 major launches for Ford Motor Co. (F), Kia, Volkswagen, Tata Motors (TTM), Daimler AG (DDAIF) and Honda Motor Co. (HMC).

In the second quarter of its fiscal 2011, the Zacks #3 Rank (Hold) company reported a 31% increase in profit to $383 million (excluding non-recurring items) from $292 million (excluding non-recurring items) in the same quarter of previous year. On earnings per share, profits improved 30% to 56 cents from 43 cents in the prior year, beating the Zacks Consensus Estimate by a penny.

The improvement in earnings during the quarter was attributable to higher sales on the back of the company’s strong position in the key geographic markets. Net sales in the quarter grew 22% to $10.14 billion, which was higher than the Zacks Consensus Estimate of $9.25 billion.

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