Johnson Controls Inc. has reached a tentative deal with Delphi Corp. to buy Delphi's global auto battery business for $212.5 million. Before the deal is finalized, JCI wants a long-term contract to supply batteries to General Motors.
Delphi and JCI stressed that the initial agreement is non-binding and could change or even be dropped. The companies hope to finalize the deal this summer.
Delphi says its battery business generates annual revenues of about $600 million.
The deal, if completed, would give JCI battery manufacturing capacity in China and South Korea via joint venture operations. JCI, based in Milwaukee, does not have any battery-making capacity in the Asian region.
The sale does not include Delphi's two battery-making plants in the United States. Those plants, in New Brunswick, N.J., and Fitzgerald, Ga., will build batteries for JCI on a contract basis through 2007, the companies said.
The disposition of those two plants has yet to be determined and is the subject of negotiations with unions, a Delphi spokeswoman said.
JCI has seven battery-making plants in the United States, a company spokeswoman said.
The deal, as structured, would give Johnson Controls battery-making plants in China, South Korea, Saudi Arabia, France, Brazil, Mexico and Canada, the Delphi spokeswoman said.
JCI also would get worldwide, royalty-free rights to the Freedom battery brand, which Delphi builds for the aftermarket.
The battery plants included in the deal primarily use lead-acid technology. JCI can bring new technologies to some of those plants, the spokeswoman said.
Delphi, of Troy, Mich., ranked No. 1 on the Automotive News list of top 100 global original equipment suppliers with original equipment sales of $26.20 billion in 2003.
JCI ranked No. 7 on that list with original equipment sales of $15.19 billion in 2003.
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