SWORDS, Ireland — Ingersoll-Rand plc has entered into an agreement to sell a 60 percent stake in its Hussmann refrigerated display case business to the private equity firm Clayton Dubilier & Rice LLC (CD&R).
Ingersoll Rand will receive cash proceeds of approximately $370 million at closing and will retain a 40 percent equity interest in the business. The company will use the cash to expedite its $2 billion share repurchase program, which began on June 8, 2011 and expects to purchase 28 to 32 million shares by the end of 2011.
“This transaction with CD&R allows us to participate in the future success of Hussmann,” said Michael W. Lamach, chairman, president, and chief executive officer of Ingersoll Rand. “CD&R is committed to ensuring a seamless transition and maximizing the long-term prospects for the business. For Ingersoll Rand, selling a portion of the Hussmann business now provides immediate value to our shareholders, as well as benefit in the future from the divestiture of our remaining interest.”
“Hussmann is a clear market leader with an outstanding reputation, a history of innovation, strong long-term customer relationships, a dedicated work force and significant manufacturing scale advantages,” said Nathan K. Sleeper, a partner at CD&R. “These core strengths form a solid foundation from which to build an even more successful enterprise.”
Ingersoll Rand said it selected CD&R due to the firm’s experience with food and retail markets, and a strong emphasis on driving profitable growth. Members of its leadership team have experience in the refrigeration, food service, and retail markets.
Ingersoll Rand said this transaction will have the following impact on its financial statements assuming a Sept. 30 closing date:
• The company’s ownership interest in Hussmann will be reported using the equity method of accounting for the fourth quarter of 2011 and going forward. Equity earnings will be reported in other income in continuing operations.
• Hussmann results will be reclassified from discontinued to continuing operations for the third quarter of 2011 and all prior periods.
• Third-quarter results from continuing operations will include an impairment charge to reflect the terms of the agreement.
The company is maintaining its 2011 full-year EPS from continuing operations guidance range of $2.90 – $3.10, excluding the impact of Hussmann impairment charges. “Due to the growing level of uncertainty in the macroeconomic environment, we are not changing our forecast to reflect additional earnings from the reclassification of Hussmann. We continue to closely monitor our order intake rates and other demand indicators to determine if we see changing conditions in end-markets in the second half of the year,” Lamach said.
For more information, visitwww.ingersollrand.com.