Japan's Daikin industries (IW 1000/300), the world's biggest air-conditioner company, said Wednesday it would acquire rival Goodman Global in a $3.7 billion deal as it looks to tap the huge North American market.
The acquisition would see the Osaka-based firm pick up the much smaller Goodman to add a "strong fourth pillar" to its key global operations in Japan, China and Europe.
U.S.-based Goodman focuses on North America, the world's single biggest heating, ventilation and air-conditioning market, and has an expertise in central air conditioning, said Daikin.
Gains Ducted-Style Expertise
"Most systems in this market are ducted-style, a segment where we have little presence," Daikin Chief Executive Noriyuki Inoue said in a statement.
"Goodman and Daikin can enjoy a complementary relationship by having more channels in the market to offer Goodman's market-leading ducted products and Daikin's existing products," he added.
However, investors were unimpressed, with Daikin's Tokyo-listed shares falling 3.53% to 2,073 yen on Wednesday.
Ratings agency Moody's also threw cold water on the deal, saying it had put Daikin's credit rating on review for a possible downgrade even though the acquisition would boost the Japanese firm's presence in North America.
"The transaction will be financed with a combination of debt and cash on hand," it said in a statement after the deal was confirmed.
"[It] will have a significant impact on the size of Daikin's balance sheet and will negatively affect" its financial profile.
