Watsco, Inc. (NYSE:WSO) (NYSE:UTX) today announced that it has executed a definitive agreement to acquire Carrier’s HVAC distribution network in Canada. Carrier is a unit of UTC Climate, Controls & Security. The business will operate as a joint venture under the name Carrier Enterprise Canada with Watsco owning 60% and UTC Climate, Controls & Security 40%. The companies operate similar joint ventures in the U.S., Latin America and the Caribbean. The transaction is expected to close by the end of April 2012 and is subject to customary closing conditions.
The Canadian distribution network operates 35 locations and had revenues of approximately $330 million in 2011 serving 5,000 customers in all of the provinces and territories of Canada. The joint venture will operate as a stand-alone business using its existing infrastructure under the leadership of its present management team. Following the transaction, Watsco’s annual revenue run-rate will approximate $3.4 billion.
Albert Nahmad, Watsco's Chairman and Chief Executive Officer, commented: “This represents a great opportunity to expand our network into a large market in the Americas. All of the important fundamentals of energy-efficiency, conservation and environmental-sensitivity are present and relevant in Canada and its economic affluence provides us the confidence to invest and grow in this market. As a whole, the Americas have proven to be far more stable and resilient than other parts of the world and we see considerable long-term opportunity to further develop our market position.”
“Carrier Enterprise’s performance has exceeded our expectations with sales growth outpacing the industry,” said Geraud Darnis, President & CEO, UTC Climate, Controls & Security. “This new joint venture in Canada will build on the success of the Carrier Enterprise business model to further grow share and profitability.”
Mr. Nahmad added: “This is a very successful business with a strong historical presence and a great leadership team. They will have access to all of Watsco’s resources to add products, locations and capital to aggressively grow market share and expand the business. We also believe they will respond well to our entrepreneurial style and spirit.”