Sentinel Capital Partners to acquire Carrier fire business for $1.43bn

June 2024 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

June 2024 Issue

As part of its plan to divest non-core assets, heating and ventilation solutions provider Carrier Global Corporation has agreed to sell its Industrial Fire division to Sentinel Capital Partners in a deal worth $1.43bn. The transaction is expected to close in the third quarter of 2024, subject to regulatory approvals and customary closing conditions.

Carrier’s Industrial Fire business is a global leader in fire detection and suppression solutions for high-hazard applications across verticals such as critical infrastructure, oil & gas, marine and clean energy. The sale will include the industry-leading Det-Tronics, Marioff, Autronica and Fireye brands. The Industrial Fire division has approximately 1400 employees operating in more than 20 countries.

The company’s divestment plan is part of a wider strategy to position itself as a leader in intelligent energy solutions. The firm has already sold several businesses, including its global access solutions unit and its commercial refrigeration business. Carrier’s share price increased more than 5 percent in March, following announcement of the deal, and has increased by more than 30 percent over the previous 12 months, outperforming the S&P 500 industrials sector.

“Industrial Fire is a great business with leadership positions in the markets in which it operates, and an engaged, experienced team focused on delivering differentiated solutions to customers. We look forward to watching its continued growth under the ownership of Sentinel,” said David Gitlin. “This transaction marks another milestone in our transformation as we become a more focused, higher growth company, and furthers our vision to become the global leader in intelligent climate and energy solutions.”

The sale of the Industrial Fire division is the next step in Carrier’s ongoing portfolio transformation, following the recent $13.17bn acquisition of Viessmann Climate Solutions from the Viessmann Group and the recently announced agreements to sell Carrier’s Global Access Solutions business to Honeywell for nearly $5bn and its Commercial Refrigeration business to Haier for $775m. Carrier continues to prepare for the last of its four announced business exits – its combined commercial and residential fire businesses.

The sale of the Industrial Fire business will allow the unit to build on the strength of its advanced lifecycle solutions, strong customer relationships and high growth potential across key segments.

In February, Carrier reported fourth-quarter profit above analysts’ estimates, driven by robust demand for its heating, ventilating and air conditioning products. According to a statement announcing the deal, Carrier, which is the global leader in intelligent climate and energy solutions, expects net proceeds from the transaction to exceed $1.1bn and intends to use the proceeds to pay down debt. The company anticipates resuming share repurchases as it returns to approximately 2x net leverage by the end of 2024.

Goldman Sachs & Co. LLC and JP Morgan Securities LLC served as financial advisers to Carrier. Paul, Weiss, Rifkind, Wharton & Garrison LLP and Linklaters LLP provided external legal counsel. Blackstone Inc. is believed to have provided more than $1bn in financing to fund the deal.

Carrier reported strong financial results for Q4 and full year 2023 and held $10bn in cash and equivalents as of 31 December 2023. Carrier announced that it anticipated reported sales of around $26.5bn in 2024.

Sentinel has raised more than $11.2bn of capital since its inception and invests in mid-market businesses across the US and Canada. The firm targets the business services, consumer, healthcare services and industrials sectors and invests in management buyouts, recapitalisations, corporate carve outs, going-private transactions of established businesses with earnings before interest, taxes, depreciation and amortisation of up to $80m. It also makes non-control investments in senior equity and debt securities of companies in its target sectors.

Richard Summerfield