Bosch expands global reach with strategic acquisitions

Bosch is making significant strides in the heating, ventilation, and air conditioning (HVAC) market through substantial investments. The technology conglomerate from Gerlingen, near Stuttgart, plans to acquire the HVAC business for residential and small commercial buildings from Irish building technology company Johnson Controls. Additionally, Bosch will purchase a joint venture between Johnson Controls and Japanese industrial firm Hitachi, for a total price of eight billion US dollars, approximately 7.4 billion euros. "We can finance these transactions entirely on our own," stated Bosch CEO Stefan Hartung. Both the shareholders and the supervisory board of Bosch have approved the transaction. Binding agreements have been signed by the involved parties, and the acquisition is expected to be completed within twelve months, pending regulatory approval. According to Hartung, the acquisition represents the largest transaction in Bosch's nearly 140-year history. By comparison, nearly ten years ago, Bosch made a smaller acquisition when it took full control of home appliance maker BSH from Siemens for three billion euros. The businesses Bosch intends to acquire generated around four billion euros in revenue in 2023, employing about 12,000 people. The transaction includes 16 production facilities and 12 development locations in over 30 countries. Approximately 90% of the revenue was generated in the USA and Asia, solidifying Bosch's presence in these regions. Hartung emphasized that this acquisition opens up further growth opportunities and makes the company more resilient. He had previously indicated that Bosch aims to strengthen its position through strategic acquisitions. Bosch anticipates significant growth in the HVAC market, predicting a 40% increase worldwide by 2030. Technological advancements, climate change initiatives, and new regulatory requirements are driving this growth. Bosch aims to actively shape the growing energy and building technology market and secure a global leading position. Currently, Bosch is predominantly active in the heating market in Europe through its subsidiary Bosch Home Comfort Group, which includes brands like Buderus. This acquisition significantly enhances Bosch's climate control sector and allows for global expansion of the heat pump market, achieving better cost advantages. The new business will be integrated into the subsidiary formerly known as Bosch Thermotechnik, now the Home Comfort Group, based in Wetzlar. Last year, this subsidiary generated five billion euros in revenue with 14,600 employees, accounting for roughly one-twentieth of Bosch's total revenue of 91.6 billion euros. After the acquisition, both revenue and employee numbers for the subsidiary are expected to nearly double. Bosch, known primarily as the world's largest automotive supplier, also sells household appliances, power tools, and heat pumps. However, the company's broad portfolio has recently been a disadvantage, facing headwinds in nearly all sectors. The transition to electric motors and fuel cells is slower than anticipated, and it may take some time before the substantial investments in transformation pay off. The sluggish global economy is also affecting many customers, leading to a dip in sales for items like cordless screwdrivers, washing machines, and refrigerators. To maintain its competitiveness, Bosch is currently cutting costs and prioritizing investments, including manpower. The company has recently considered laying off several thousand employees. Consequently, Bosch is cautious with its annual targets, aiming for a revenue growth of five to seven percent.