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Deal for Emerson's $14 Billion HVAC & Refrigeration Business

Mentioned Decarbonization-Driven Growth by Blackstone

Emerson, a global provider of technology, engineering, and industrial software, announced an agreement to sell a majority stake in its Climate Technologies heating, air conditioning, and refrigeration business unit to alternative investment manager Blackstone in a transaction valued at $14 billion.

In a statement announcing the transaction, Joe Baratta, global head of Blackstone Private Equity, highlighted the company development prospects resulting from residential and commercial decarbonization efforts.

Baratta said:

As a leader in helping people and businesses switch to more energy-efficient heating and cooling equipment as part of their carbon reduction initiatives, the company is positioned for faster growth.

Global efforts to manage and reduce greenhouse gas (GHG) emissions are becoming increasingly dependent on HVAC and cold chain technologies. Buildings are a major contributor to global GHG emissions and one of the most difficult to replace due to their durability. It is estimated that buildings produce approximately 15% of worldwide carbon emissions, with heating and cooling accounting for approximately 35% of that total. Several major programmes have been initiated to decrease emissions from the built environment, including a planned EU regulation requiring all new buildings to be net zero by 2030 and a multibillion-dollar proposal by the Biden administration to reduce emissions from 300,000 government facilities.

Emerson will maintain a 45% common equity investment in the Climate Technologies segment and will receive roughly $9.5 billion in pre-tax cash proceeds and a $2.25 billion note under the terms of the new arrangement. The unit consists of Emerson's Copeland compressor business and its whole range of products and services across all HVAC and refrigeration end markets, generating about $5 billion in annual revenue.

Baratta added:

"We are ecstatic to support the company's committed team as they continue to innovate and provide energy-efficient solutions to their clients."

Blackstone announced earlier this year that it sees an opportunity to invest approximately $100 billion over the next decade in energy transition and climate change solutions initiatives.

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