Germany's Viessmann Group is selling its heat pump business, viewed as a key technology for the transition away from fossil fuel heating, to Florida-based Carrier Global Corp. as part of a 12 billion-euro ($13.2 billion) deal.
The sale of Viessmann's “climate solutions” business, announced by both companies late Tuesday, comes as Germany is putting into place plans to phase out gas and oil heating systems in favor of climate-friendly alternatives. Heat pumps, which use electricity and ambient air or groundwater, are considered far more efficient than traditional combustion furnaces.
German Vice Chancellor Robert Habeck, who is leading those plans, said the Viessmann deal showed that the market for heat pumps was “so attractive that it is drawing investment,” but added that the government would scrutinize the deal.
“It is important that the advantages of our energy policy and profits that are made with it continue to benefit Germany as a location,” he said. “We will pay attention to this.”
Senior opposition lawmaker Jens Spahn, in comments to the RND newspaper group, accused the government of piling pressure on manufacturers to step up their production fast or risk losing market share to Asian competitors.
“Apparently foreign investors are needed for that,” he said, arguing that the government's policies were leading to “a sell-off of the German heat pump.”
Habeck played down the possibility that Germany might require heat pump makers to produce a certain percentage of their products locally if they wanted to benefit from government subsidies for new heating installations.
Habeck said protectionist measures, seen for example in the U.S. Inflation Reduction Act, would ultimately harm an exporting country like Germany “and we don't want to fuel a run toward closed markets.”
Instead, Germany could require manufacturers to meet certain high standards for environmental sustainability — such as when it comes to the cooling fluids used in heat pumps. “I believe that German companies are very, very strong in that regard," Habeck said.
“If we do it right, then it will lead to the same thing, which is to increase and support the share of production that happens in Germany,” he told reporters in Berlin.
The deal entails Carrier paying 80% in cash and 20% in Carrier shares to Viessmann. It will see family-owned Viessmann become one of the biggest shareholders in Carrier, which is based in Palm Beach Gardens, Florida. The German company's CEO, Max Viessmann, will join Carrier's board of directors when the deal is completed, which is expected around the end of the year.
Carrier, whose business activities include refrigeration, said the Viessmann climate solutions division would give it “an iconic, premium brand in the highest growth segment of the global heat pump and energy transition markets.”
Viessmann said the U.S. firm's “global reach, broad product portfolio, financial strength and shared commitment to sustainability” would enable its business to “maximize our impact on Europe’s independent energy transition.”
The German company said the two sides had agreed to rule out layoffs for three years. They will also guarantee the future of the Viessmann division's major production, research and development sites for five years and its headquarters in the central German town of Allendorf for 10 years.
The division has about 11,000 employees. Viessmann said 106 million euros would be paid out to them as a one-time bonus marking “106 years of success” once the deal was completed.
