updated 8/24/2005 7:43:31 PM ET 2005-08-24T23:43:31

Johnson Controls Inc. is buying York International Corp., which makes ventilation, air conditioning and refrigeration equipment, for about $2.4 billion cash.

Milwaukee-based Johnson Controls, which makes auto parts and industrial systems, said Wednesday the deal would nearly double its presence in the growing building environments industry. As part of the deal, Johnson will also assume about $800 million in York’s debt.

Johnson said it has offered $56.50 per share in cash for York, Pa.-based York International, a 35.3 percent premium above York’s closing price of $41.75 Wednesday on the New York Stock Exchange.

The deal was announced after the market close. York shares soared 32.4 percent, or $13.51, in after-hours trading on news of the company’s sale. Johnson shares rose 7 cents after closing at $56.77, down 18 cents on the NYSE.

“The transaction will enable us to become a single source of integrated products and services that building owners want in order to optimize comfort and energy efficiency,” Johnson Chairman and CEO John M. Barth said.

York received no competing offers for its business, said Helen Marsteller, vice president for investor relations, who added that “the company was not for sale.”

Johnson said the acquisition would make it the largest global provider to the high-margin building services market and allow it to integrate York’s equipment with the temperature-control equipment Johnson makes.

York manufactures and services heating and cooling equipment, and Johnson Controls installs and maintains the technology that controls that equipment.

The ability to offer both systems as a package and sell to international markets where the other is stronger will boost revenues in the segment by 10 percent or more annually, said Johnson Controls CEO and Chairman, John Barth.

“There are two messages here. One is growth, growth, growth. The other is the cost synergies we’ve identified,” Barth told The Associated Press. “We believe York is a great fit for Johnson Controls.”

Standard & Poor’s Ratings Services noted in a statement that the acquisition represents a shift in strategy for Johnson, which provides services for commercial buildings, by enabling it to enter the residential market. The transaction will also make Johnson an equipment manufacturer, “a business that has generated low returns for York in recent years,” Standard & Poor’s said.

And while the two companies would benefit mutually from streamlined operations and opportunities to cross-sell products and services, “realizing sales and cost synergies will take several years, and the magnitude of the potential benefits is uncertain,” Standard & Poor’s said.

It was unclear where the combined company would be headquartered or whether any layoffs would occur among Johnson’s 120,000 employees or York’s 24,000 workers.

The acquisition is expected to be completed in December, pending regulatory approval and a vote by York shareholders.

York posted 2004 sales of $4.51 billion, while Johnson Controls’ sales totaled $26.55 billion. York will be combined with its nearly $6 billion controls group, Johnson Controls said.

York is expected to modestly boost Johnson’s earnings per share in fiscal 2006.

Analysts expect Johnson to earn $4.99 per share for the fiscal year, according to a Thomson Financial survey.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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