Optimism Surrounds Japanese Purchase of Houston HVAC Giant

    SPRING, TX, September 26, 2012 /24-7PressRelease/ -- In late August this year, the Chief Executive Officer of Goodman Global Inc., David Swift, went from Houston, Texas to Osaka, Japan to attend a news conference. The world's now largest air conditioner manufacturer, Daikin Industries Ltd., is acquiring this monumental competitor company for the astonishing sum of $3.7 billion. Daikin intends to use this to extend its residential heating and cooling ventures into North America. This move unites two of the HVAC market's biggest players.

David Swift, CEO of Goodman Global, was quoted as assaying, "The combination of the Daikin Group and Goodman is the next step in becoming the definitive leader in the global HVAC marketplace."

"I am enthusiastic about our companies coming together to further satisfy the needs of our customers now and in the future", Swift continued.

Barry Andrews, owner and president of Air National of Houston, expressed confidence that the purchase signifies overall strength in the industry. When breached for comment, Andrews stated, "Daikin is a big company with a reputation for making good acquisitions. As a Goodman reseller, I'm pleased that this deal is moving forward, especially coming off the heels of a major recession."

Describing the past few years as lean due to a recovering economy, Andrews continued, "Although things are improving, the past few years have definitely caused some worry for our Houston air conditioning repair company. So witnessing a breakthrough deal like this is very encouraging for everyone."

Goodman Global sells HVAC products to service residential as well as light commercial buildings. These products are sold not only as Goodman, but also under the Amana brand name.

Last year Goodman reported annual revenue of $2.1 billion, which, according to the yearly survey by Houston Chronicle, put it among Houston's largest private companies in sales. The main plants for Goodman are in Houston & Tennessee, with distribution centers all across North America.

The AC titan employs over 4,500 people, almost 2,000 of those in Houston alone. The Osaka, Japan based company, Daikin, has operations throughout the U.S., including Dallas. The sale is expected to close in the fourth quarter of this year.

Noriyuki Inoue, chairman and CEO of Daikin, said, "Daikin will also capitalize on Goodman's lean management know-how to help us improve the earnings power of the entire Daikin Group and expand our business in emerging and high volume markets globally,".

The Japanese company has been interested in the Houston based company for quite some time. Any efforts or talk of the exchange were postponed though due to the devastation on Japan from last year's earthquake and tsunami, not to mention the economic uncertainty they caused.

Daikin and Goodman both had prepared statements to the effects of combing the global, environmental, technological, and commercial expertise of Daikin with the logistical, residential and light commercial expertise of Goodman. The hopes for this combination are to achieve success in HVAC such that has never been seen before or is even possible for an individual company.

Daikin employs roughly 44,000 people, has manufacturing operations in 18 countries, and a sales presence in more than 90 countries. Daikin AC Americas is headquartered in Carrollton, Texas. They also own McQuay International, Minneapolis, and American Air Filter, Louisville, Ky., recorded 2011 sales of more than $15.5 billion.

Until this buyout, Daikin has only made less than 10% of its sales from the Americas. Some of their rivals are Johnson Controls Inc., Lennox International, and Ingersoll Rand Plc's Trane. It will also allow it to overtake top-ranked Carrier brand maker United Technologies Corp., having access to about 900 distributors.

Matt Collins, Edward Jones analyst, says, "Carrier has been restructuring for the last five years, taking out almost half its factories and streamlining its work force, so it's not as if they've been sitting back enjoying the ride. Recent signals of a U.S. housing recovery probably sweetened the deal for Daikin,".

Apparently this change has shaken some stock holders as stocks fell United Tech., Ingersoll, Lennox, and Daikin alike. Nikkei actually gained .4 percent to their value.

Diakin's plan does not include turning to equity markets for funding in this deal. They plan to get loans, use cash reserves, and tap a bond issue of about 50 billion yen. The goal for this, which is Japan's third largest this year alone, is to be completed in the fourth quarter this year. They expect 24 billion yen in strategic and efficiency benefits from the purchase in three years.

Goodman was actually bought in October 2007 by San Francisco based Hellman & Friendman for about $2.65 billion, earning them a cool $1 billion flip profit. Goodman also owns Quietflex flexible ductwork solutions that are manufactured in Texas, Florida, Arizona and Pennsylvania. Daikin would capitalize on Goodman's lean manufacturing know-how and supply chain management expertise to improve the earning power of the entire Daikin Group.

This expertise will allow Daikin to penetrate the high-volume "value" segment in cost-sensitive global markets. Goodman, in turn, will incorporate some of Daikin's energy saving and power management technologies. Daikin said Goodman will remain independent and that it does not plan to merge Goodman into any other existing organizations or divest any of its businesses "in the foreseeable future."

Air National of Houston is a service-oriented provider of residential and commercial Air Conditioning and Heating systems. For more information, please contact us at (281) 251-3143.

Website: http://www.AirNationalHouston.com

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