Japanese air-conditioner maker Daikin Industries is considering buying US rival Goodman Global among other acquisition targets, the company's CEO said, in what could be a $4 billion deal. San Francisco-based private equity firm Hellman & Friedman has put Goodman on the auction block and contacted a number of potential bidders, including Daikin, a source familiar with the matter told Reuters last month.
Noriyuki Inoue, chief executive of the world's second-largest air-conditioner maker, confirmed on Friday that Daikin had been approached about Goodman and said the company would have to weigh the potential merits of a transaction. He stressed they were not in negotiations and were also looking at several other deals.
"We want to make tie-ups, joint ventures and acquisitions an everyday part of achieving our objectives," Inoue told reporters. "We are considering buy-outs of several companies at the moment." One strategy would be to buy shares in Goodman after any future stock market listing, Inoue added, although Goodman Global withdrew a registration in November last year for an initial public offering. If Daikin were to buy Goodman, it would make the Japanese firm the market leader in air-conditioners, surpassing United Technologies Corp unit Carrier, and help to strengthen its customer base outside the saturated Japanese market.
Lack of growth at home and the strength of the yen have spurred Japanese firms' outbound acquisitions, which nearly doubled last year to $38.5 billion, according to Thomson Reuters data. Inoue said Daikin was set to achieve the top spot in air conditioning sales soon, even without the take-over, thanks to past mergers and gains in growth markets.
Referring to financing for the potential deal, he said it was important to avoid diluting share value. News of Daikin's interest last month sparked a fall in its share price, reflecting investor concerns it might issue stock to pay for the acquisition. Inoue's comments on Friday helped push Daikin's shares down 2.3 percent to 2,891 yen, underperforming a 0.9 percent fall in the Nikkei average. But some investors see Goodman as an opportunity for Daikin to accelerate its overseas growth.
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