JCI Johnson Controls International PLC

Honeywell International Inc., which has been trying to orchestrate a megamerger with United Technologies Corp., has also quietly been shopping a unit that provides safety and other services to commercial buildings, in the latest sign of the industrial conglomerate's effort to reshape itself through deal making.

About three months ago, Honeywell began soliciting interest in its so-called building-solutions business, which could be worth between $3 billion and $4 billion, according to people familiar with the matter. Bankers at Goldman Sachs Group Inc. have been helping with the sales process, targeting other buildings-systems companies, the people said.

Additional details were unavailable and it isn't clear whether Honeywell would sell the business if it succeeded in merging with United Technologies. In any event, as always, there may be no deal at all.

The potential asset sale comes just days after it surfaced that Honeywell has explored a merger deal with United Technologies. Talks between the two companies had been going on for several months, but United Technologies now says that combining two of the biggest players in the aerospace and commercial-building equipment businesses "would face insurmountable regulatory obstacles and strong customer opposition."

Still, Honeywell has signaled that it isn't ready to give up yet on a merger with United Technologies, which would be one of the biggest deals at a time when such activity is booming.

Honeywell's building-solutions business is part of the company's automation and control solutions, or ACS, unit. In 2015, Honeywell had $38.6 billion in revenue, with $14 billion of that coming from ACS. The asset Honeywell is currently trying to sell is a piece of the building-solutions and distribution business within ACS that accounted for $4.6 billion in revenue in 2015. It installs and maintains systems that keep facilities safe from fire and other emergencies and energy efficient, according to Honeywell's website.

Honeywell, whose shares are down about 6% since its bid for United Technologies became public, currently has a market capitalization of $77 billion.

Based in Morris Plains, N.J., Honeywell makes everything from aircraft guidance systems and gas meters to rubber gloves. While many competitors have narrowed down and sold off divisions, Honeywell has until now taken the opposite tack under Chief Executive Dave Cote, who has done dozens of acquisitions and kept the company a sprawling conglomerate.

Despite volatile markets, there has been a flurry of deal activity in the industrial sector this year. Last month, Johnson Controls Inc. agreed to buy Tyco International PLC for roughly $15 billion. The deal would create a giant provider of commercial-building systems, and likely sidelines both companies from bidding on the Honeywell division, some of the people said.

Last week, private-equity firm Apollo Global Management LLC agreed to buy ADT Corp. in a deal that values the burglar-alarm vendor at more than $13 billion including debt.

Honeywell is working with Centerview Partners and Lazard on its pursuit of United Technologies, according to people familiar with the matter. United Technologies is working with J.P. Morgan Chase & Co. It is possible other advisers could be added to either side should the potential deal progress.

Write to Dana Cimilluca at dana.cimilluca@wsj.com and Ted Mann at ted.mann@wsj.com

(END) Dow Jones Newswires

February 24, 2016 13:15 ET (18:15 GMT)

Johnson Controls (NYSE:JCI)
Historical Stock Chart
From Aug 2024 to Sep 2024

Johnson Controls (NYSE:JCI)
Historical Stock Chart
From Sep 2023 to Sep 2024