Soroban Capital Partners has recently entered the industrial firm Johnson Controls International by investing over $500 million, thus becoming one of the company's top 20 shareholders. This move comes in the midst of pressure from Elliott Investment Management, known for its activist approach in influencing companies. The exact intentions behind Soroban's investment remain unclear, as both Soroban and Elliott declined to comment on the matter.
Johnson Controls, founded in 1885, specializes in producing appliances and equipment for commercial buildings and home comfort appliances. Their products range from electronic systems for offices, schools, and hospitals to ventilation, security, and fire detection systems. The company has been actively working on divesting its heating and ventilation assets (HVAC) to streamline its business operations and focus on core competencies.
Apart from divesting its HVAC assets, Johnson Controls is also contemplating the sale of its ADT alarms business unit, which operates in Europe and Latin America. Private equity funds have already shown interest in acquiring this unit. In addition, the company has been in discussions with industrial firms like Robert Bosch GmbH, Lennox International, and Samsung Electronics, who are competing to acquire its HVAC assets worth over $6 billion.
Despite steady residential construction demand fueling second-quarter earnings, Johnson Controls forecasted third-quarter profit below Wall Street estimates. The company's stock has seen an increase of nearly 20% this year, reaching a market value of $46.5 billion. This growth has garnered attention from prominent investors like Elliott, who are focused on enhancing shareholder returns.
Elliott Investment Management, known for its activist campaigns, has been actively involved in companies like U.S. telecommunications infrastructure firm Crown Castle and oil refiner Phillips 66. Their strategies involve pushing for changes within companies to drive shareholder returns and enhance overall business performance. With their recent stake in Johnson Controls, the company may witness significant transformations in its operations and strategic direction.