09 February 2016

Daikin Industries Ltd. (Head Office: Osaka; Representative Director, President and CEO: Masanori Togawa) (“Daikin”), through its subsidiary American Air Filter Company Inc. (Headquarters: Louisville, Kentucky; Representative: Philip Whitaker) (“AAF”), has decided to acquire U.S. air filter manufacturer Flanders Holdings LLC (Headquarters: Washington, North Carolina; Representative and CEO: Peter Jones) (“Flanders”). The acquisition price is 430 million dollars (approximately 50.7 billion yen at an exchange rate of 1 USD=118 JPY). Daikin is to acquire all shares of Flanders from a shareholder group led by an affiliate fund of Insight Equity Holdings LLC (Corporate Headquarters: Southlake, Texas, United States; Representative: Ted W. Beneski) (“Insight Equity”). The acquisition is expected to be concluded in April 2016 after completion of the necessary procedures. 

As a leading air filter manufacturer in the United States, Flanders is particularly adept in products with high functionality and high value-add that are used in industrial cleanrooms such as those in the fields of pharmaceuticals and food processing. The company boasts a broad line-up ranging from commercial to residential use and a nationwide sales network. Flanders has manufacturing bases near most major U.S. cities, including Chicago and New York, and excels in short lead times and low logistics costs to deliver products that are cost competitive.

Having established manufacturing bases in the regions of Japan, North America, Europe, China and Southeast Asia, to this point, Daikin has expanded its filter business through its subsidiaries AAF and Nippon Muki Co., Ltd. Products have focused on commercial-use air conditioning filters used in buildings and factories and engineering fields, including dust collection systems for production facilities. AAF has closely embedded itself in each region of the world and performs development, production, sales and services for products, satisfying the needs of an extensive market. 

With this acquisition, the Flanders business will be integrated into AAF and will enable AAF to leverage its global sales network to market the cleanroom equipment and high-end air filter products that are the strengths of Flanders. In addition to making AAF a leading manufacturer in the United States, which is reportedly the largest air filter market in the world, this combination will also position AAF as a leading company in the global market. 

As a result of the transaction, the filter business of the Daikin Group will become a business with sales exceeding 850 million dollars (approximately 100 billion yen at an exchange rate of 1 USD=118 JPY). Future synergies with the air conditioning business are anticipated as the filter business transforms into a core Daikin business as a third pillar behind air conditioning and chemicals. The combination will also serve to improve air environments in homes, buildings and factories; better addressing global environmental issues, including mitigation of air pollution; and meet the need that is increasing worldwide for creation of comfortable air environments.