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Daikin to buy Goodman Global in push into the Americas

Daikin will not raise capital to fund the deal

Gulf News

Osaka/New York: Japan’s Daikin Industries Ltd, the world’s second-largest maker of air conditioners, has agreed to buy US rival Goodman Global Inc from private equity firm Hellman & Friedman in a deal worth about $3.8 billion (Dh13.97 billion), sources familiar with the matter said.

Shares in Daikin slumped 7 per cent after news of the impending deal, which marks a major push into the Americas for the company which has touted its ambition to become the world’s biggest player in the heating, ventilation and air-conditioning sector.

The deal will be announced later on Wednesday, a senior official at the Japanese air-conditioner maker said on the condition that he not be identified.

Daikin will not turn to equity markets to fund the deal but use loans, its cash reserves and a bond issue of about 50 billion yen to fund the deal, the same official told reporters.

San Francisco-based Hellman & Friedman bought Goodman Global in October 2007 for $1.8 billion in cash, including $1.1 billion of its own capital. The transaction also included assumed debt and other financing for a total of $2.65 billion.

Daikin has long been interested in Goodman but put off takeover talks following Japan’s devastating earthquake and tsunami last year and then later due to uncertainty over the global economy.

Hellman & Friedman and Daikin both declined to comment.

A deal would come more than two years after Goodman Global filed for an initial public offering in May of 2010. The company withdrew its IPO registration later that year, and a source at that time said it had explored a possible sale to Daikin and other potential buyers.

The Americas are the second-biggest market, behind Japan, for a Daikin business that provides refrigerants.

Daikin took over Malaysian-based O.Y.L. in 2006.

The company competes in a crowded field of providers of heating and cooling technology for residential and commercial use. Rivals include United Technologies’ Carrier unit, Johnson Controls’ York, Lennox International, and Ingersoll Rand Plc’s Trane brand.