Viessmann's air conditioning division went to Carrier Global for twelve billion euros. © Nadine Weigel/dpa
The U.S. company Carrier has made headlines with the acquisition of Viessmann's heat pump business. But does Carrier even have the means to grow the business?
Dusseldorf – The U.S. company Carrier is letting the Viessmann deal cost around twelve billion euros. It is questionable whether the company can invest heavily in Viessmann's heat pump business, as it would first have to reduce debt, as Wirtschaftswoche writes. The Viessmann deal is also largely financed by debt. In an interview, company boss Max Viessmann had justified the sale with the better growth prospects under Carrier.
Carrier: Heavily indebted after Viessmann deal
The U.S. group's balance sheet showed net debt of $5.5 billion at the end of March. In order to cover the purchase price, the Americans are taking out a bridge loan of up to 8.2 billion euros from the US investment banks JP Morgan and Bnak of America, according to the report.
According to the rating agencies Standard & Poor's and Moody's, the company will have net debt of four times annual earnings before interest, taxes, depreciation and amortization (Ebitda) after the completion of the acquisition. Gross, Carrier will then have 18 billion dollars in debt on its balance sheet. For comparison, Carrier's revenue is $20.4 billion, and its adjusted operating profit is $2.9 billion.
Rating for carriers "on probation"
Nevertheless, the two rating agencies grant the company a "probationary rating" for the time being and leave the ratings at the lower end of the solid "investment grade" rating. Nevertheless, they expect Carrier to prioritize debt reduction over the next 24 months, it added.
CEO Dave Gitlin has promised investors and rating agencies to reduce net debt to twice Ebitda by 2025. According to Wirtschaftswoche, this means that Carrier will have to spend many billions generated in its operations on debt repayment. In addition, Gitlin has put two divisions with a combined turnover of 4.2 billion dollars up for sale, which could bring in a few billion.
Viessmann takeover: Carrier has previously invested little
Carrier's commitments to invest in the Viessmann business are also surprising in view of the fact that Carrier has recently invested rather little in its factories. In 2022, it was just 1.7 percent of sales and for 2023 and 2024, rating analysts expect a margin of 2 to 2.5 percent. A large-scale investment offensive does not seem to be planned. Last August, Carrier acquired a majority stake in its heating and heat pump joint venture with the Japanese Toshiba Group for $930 million.
