in ev era, brookfield and caisse place $13-billion bet on conventional car battery maker - small lithium ion battery
The rapid growth of the electric vehicle industry may make headlines, but the internal combustion engine is still firmly established in attracting major investments.
On Tuesday, two Canadian investment funds announced a $13 deal highlighting the breadth of the traditional auto industry. 2-
Billion deal to buy the world's leading lead manufactureracid batteries. Toronto-
Brookfield business partner and pension manager, asset manager based in Québec, Caisse de p PetitCDPQ)
Together with other investors to buy a 100 stake in Ireland
Automotive business based on Johnson Control
Which shipping 0. 154 billion car leads-
Acid Battery in 2017
Although buyers say the asset will benefit from the growth of electric vehicles, analysts say the asset's business is still related to diesel vehicles.
"In terms of their current position, they are not electric car-type games," said Brian Bernard, an analyst at Morningstar Research, who is in charge of Johnson control.
This is the largest acquisition of Brookfield Business Partners since its listing in 2016.
The stock rose 2.
The Toronto Stock Exchange is priced at $50 an ounce. 03.
Johnson Control's leading position in the global market
Bernard said that the acid battery used in traditional vehicles is about, and has been increasing the absorption of the glass pad battery part.
The latter part, known as the AGM battery, allows the vehicle engine to turn off at red lights and other stop points and then restart quickly.
Bernard said the effort could create better fuel economy for cars that automakers are increasingly looking.
"The growth of these things has doubled --
Bernard said, "a lot of their investment is building capacity for this.
"As automakers add screens, computers and other features to their cars, this battery is also necessary to meet the growing demand for electricity," he said.
The transaction is expected to end in June 30, 2019.
It will be funded with a mix of $3. 2-
Billions of equity and $10. 2-
Billions of dollars in long-term debt financing, shares held by Brookfield and CDPQ respectively, and balances funded by other unnamed institutional investors.
Brookfield declined to ask an executive to comment, and CDPQ said no one could speak.
Investors highlighted the advantages of Johnson Control's power solutions business when announcing the deal: market leadership, stable cash flow, and a diverse customer base.
The buyer also stressed that the power solution of Johnson control was "very good --
Thanks to the growth in demand for advanced batteries for all vehicle power systems, including electric vehicles.
Even though Johnson Controls has lithium, Bernard said
The ion battery facility in Michigan is not an important player in this market.
In fact, after launching the car, the company has been away from the foundation of the car --
Seating Unit in 2016.
The latest sales have been completed to "pure-
Providers of fire, safety, climate control and construction --
Management System.
Chris Berry of House Mountain, a consultant for a company that mine battery metal, says lithium-
Ion batteries in electric vehicles are not comparable to lead batteries
Acid batteries found on an internal combustion engine.
Lead Acid Battery-
Well, it's always there, "Berry said.
"In lithium-
On the ion side, you have a lot of different chemicals and have a lot of intellectual firepower to make lithium-
Ion battery, one charge will let you go further.
Berry said: "In the battle to build the next great lithium-ion battery, most of the major players are in Asia, especially in China.
The company invests billions of dollars a year to develop supply chains for battery-grade materials such as lithium and cobalt, and then build facilities that can make batteries.
"They know they won't compete with the West that has the technology for internal combustion engines in 100," Berry said . " "So why don't they dominate the electric car industry ? " Some analysts predict that in the next 10 years or so, electric vehicles may account for 15 of all cars. Berry said it has risen from around 1 cent now.
But even in this case, traditional cars will account for 85 of the market.
Jose Lazuen, a Roskill analyst focused on advanced transportation, said Johnson Controls has a strong customer base and stable cash flow.
Electric uen said that while the growth of the Electric vehicle market may be exciting, the decision of Brookfield and CDPQ to purchase Johnson Control's power solutions may depend on the basic fundamentals.
"They see an investment opportunity that pays off," he said . "
• Email: gfriedman @ nationalpost.