Daikin Industries may have finally gotten its wish by buying Goodman Global from the private equity firm Hellman & Friedman. But its shareholders don't seem as enthusiastic.
Shares of the Japanese air-conditioner maker tumbled 3.5 percent on Wednesday, to 2,073 yen, after the $3.7 billion deal was announced.
While Daikin had considered buying its smaller American rival last year, reportedly for as much as $4 billion, it was forced to call off its pursuit after the Japanese market upheaval following the Fukushima nuclear power disaster. But the company said that it wouldn't rule out making another run at Goodman.
Daikin said in its announcement that the deal would allow the it to expand its North American presence, as well as import Goodman's low-cost manufacturing techniques into its own processes.
“Daikin will gain the position of a very competitive North American manufacturer with industry leading energy-saving products and solutions ranging fro m residential to large building systems,†Noriyuki Inoue, the company's chairman and chief executive, said in a statement.
The Japanese company said that it would pay for the takeover through a combination of its $1.5 billion in cash on hand, bank loans and bonds, as well as by drawing from a corporate loan fund set up by the country's finance ministry.
But the deal still appeared richly valued to some analysts. Moody's Investor Service said on Wednesday that it may cut Daikin's credit rating, citing the burden that the takeover will put on the company's balance sheet.
“I'm a little worried about the size of the deal,†Shoichi Arisawa, an analyst at Iwai Cosmo Securities, told Bloomberg News. “It may be a little too big for Daikin, especially in an uncertain time like this.â€
Daikin was advised by Bank of America Merrill Lynch and GCA Savvian. Hellman & Friedman was advised by JPMorgan Chase, Barclays and the law firm Simpson Thacher & Bartle tt.
