| Item 1.01 | Entry into a Material Definitive Agreement. |
On November 13, 2018, Johnson Controls International plc (the “Company”) entered into a Stock and Asset Purchase Agreement (the “Purchase Agreement”) with BCP Acquisitions LLC, a Delaware limited liability company (“Purchaser”). Purchaser is a newly-formed entity and an affiliate of Brookfield Business Partners L.P. Pursuant to the Purchase Agreement, on the terms and subject to the conditions therein, the Company has agreed to sell, and Purchaser has agreed to acquire, the Company’s Power Solutions business (the “Business”), for a purchase price of U.S.$13,244,000,000 (the “Purchase Price”), which is subject to adjustment, plus the assumption by Purchaser or its affiliates of certain liabilities of the Business specified in the Purchase Agreement. As described in greater detail in the Purchase Agreement, the Purchase Price will be (i) increased or decreased to the extent the Working Capital (as defined in the Agreement) of the Business as of the closing of the transactions contemplated by the Purchase Agreement (the “Closing”) is higher or lower than a specified target amount, (ii) decreased by the amount of any Funded Debt (as defined in the Agreement) as of the Closing and (iii) increased by the amount of any Cash Amounts (as defined in the Agreement) as of the Closing.
The Closing is subject to certain conditions, including (i) expiration or termination of any required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (ii) the receipt of certain other antitrust approvals in foreign jurisdictions, (iii) the absence of any injunction or other judgment that prevents the Closing and (iv) subject to certain exceptions, the accuracy of the representations and warranties of, and compliance with covenants by, each of the parties to the Purchase Agreement. Purchaser has obtained equity financing commitments from Brookfield Capital Partners V L.P. and Brookfield Business Partners L.P., as well as debt financing commitments from several financial institutions, to fund the transaction and associated expenses. Under the Purchase Agreement, Closing will occur on (i) the date that is the later of April 30, 2019 and three business days after satisfaction or waiver of the closing conditions (excluding conditions that, by their terms, cannot be satisfied until the Closing but subject to the satisfaction or waiver of those conditions), but subject to the completion of a 14 business day marketing period for the debt financing that Purchaser is using to finance a portion of the Purchase Price, subject to certain exceptions, or (ii) such other date as the Company and Purchaser may mutually agree. The Purchase Agreement provides that the Company may elect to delay the Closing until the last day of a calendar month. The Closing is not subject to a financing condition or to the approval of the Company’s stockholders.
The Purchase Agreement contains termination rights for each of the Company and Purchaser, including the right to terminate if the transactions contemplated by the Purchase Agreement have not been completed by August 13, 2019, which date may be extended by either party to November 13, 2019 in certain circumstances where certain regulatory approvals remain the only conditions to Closing that have not been satisfied (excluding conditions that, by their terms, cannot be satisfied until the Closing, provided that such conditions are reasonably expected to be satisfied at the Closing) (the “Outside Date”), unless the party seeking to terminate has breached the Purchase Agreement and such breach is the cause of the failure of the Closing to occur by the Outside Date. The Purchase Agreement also provides that Purchaser will pay the Company a termination fee of U.S.$800,000,000 if the Purchase Agreement is terminated because: (i) Purchaser breaches any of its representations or warranties or breaches or fails to perform any of its covenants, and such breach or failure to perform would give rise to the failure of a closing condition and cannot be or has not been cured upon 30 days’ notice (or, if earlier, by the Outside Date), (ii) Purchaser’s applicable closing conditions have been satisfied (or are capable of being satisfied at the Closing, were the Closing to occur on the date of termination) and Purchaser has failed to complete the Closing within three business days after the date on which the Closing should have occurred or (iii) the Closing has not occurred by the Outside Date in circumstances when the Company was capable to terminate the Purchase Agreement pursuant to clause (i) or (ii) of this sentence.
In the Purchase Agreement, the Company and Purchaser have made customary representations and warranties and have agreed to customary covenants relating to the sale. From the date of the Purchase Agreement until the Closing, the Company is required to conduct the Business in all material respects in the ordinary course of business consistent with past practice and to comply with certain covenants regarding the operation of the Business. For five years following the Closing, neither the Company nor any of its affiliates will directly or indirectly engage in the Business anywhere in the world, subject to certain exceptions.
