Minnesota-based global conglomerate 3M (NYSE: MMM) agreed to acquire Scott Safety from Ireland-based global multi-industrial company Johnson Controls International Plc (NYSE: JCI) in a deal valued at $2 billion, the companies said.

Scott Safety is a leader in the design, manufacture and sale of high performance respiratory protection, gas and flame detection, thermal imaging and other critical products for fire services, law enforcement, industrial, oil & gas, chemical, armed forces, and homeland defense end markets. The business is headquartered in Monroe, North Carolina, with approximately 1,500 employees globally.

On a trailing 12-month basis, Scott Safety generated sales of approximately $570 million and EBITDA of approximately $155 million. The effective enterprise value multiple is approximately 11 times estimated annual adjusted EBITDA for the first 12 months following completion of the transaction, including expected run rate synergies.

“Personal safety is a core growth business within the 3M portfolio,” said Inge G. Thulin, 3M chairman, president and chief executive officer. “This acquisition leverages our fundamental strengths in technology, manufacturing, global capabilities and brand, and builds upon recent portfolio actions within our Safety and Graphics business to position it for long-term success.”

“We are pleased to announce the sale of Scott Safety to 3M in a mutually beneficial strategic transaction,” said Alex Molinaroli, Johnson Controls chairman and CEO. “Consistent with our priority to focus the portfolio on our two core platforms of Buildings and Energy, we continue to execute on our strategic plan, which positions us to deliver a 12 percent to 15 percent earnings per share CAGR by fiscal 2020.”

“Scott Safety is a recognized leader in the safety industry with a portfolio of strong products, brands, and a talented team of dedicated employees,” said Frank Little, executive vice president, 3M Safety and Graphics Business Group. “Combining 3M’s products, brands and global capabilities in personal protective equipment with Scott Safety’s well-regarded safety products will provide a broader array of safety products and solutions, enhancing our relevance to customers worldwide.”

3M’s 90,000 employees serve customers all around the world, generating $30 billion in sales. The 3M Company, formerly known as the Minnesota Mining and Manufacturing Company, was founded in 1902. 3M’s Personal Safety Division provides respiratory, hearing, and fall protection solutions that help improve the safety and health of workers. The business also supplies products and solutions in other safety categories such as reflective materials for high-visibility apparel, protective clothing and head, eye, and face protection.

On a GAAP reported basis, 3M estimates the acquisition to be $0.10 dilutive to earnings in the first 12 months following completion of the transaction. Excluding purchase accounting adjustments and anticipated one-time expenses related to the transaction and integration, 3M estimates the acquisition to be $0.10 accretive to earnings over the same period.

Johnson Controls is a global diversified technology and multi industrial leader with 130,000 employees serving a wide range of customers in more than 150 countries. The company’s net cash proceeds from the deal are expected to approximate $1.8 to $1.9 billion, and will be used to repay a portion of its Tyco International $4 billion merger related debt.

The deal is expected to close in the second half of 2017, subject to customary closing conditions, regulatory approvals, and information or consultation requirements with relevant works councils. 3M will finance the transaction through a combination of cash and debt.

Citi and Goldman, Sachs & Co. acted as financial advisors to 3M and Cleary Gottlieb Steen & Hamilton LLP acted as legal counsel to 3M. Centerview Partners acted as Johnson Controls’ financial advisor, and Simpson Thacher & Bartlett and Axinn, Veltrop & Harkrider acted as legal counsel.



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