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Watsco Inc. and Carrier Global Corp. have announced that they have signed an agreement to acquire Temperature Equipment Corp. (TEC). Watsco recently reported record 2020 results with over $5 billion in sales, record profits and record cash flow. TEC marks Watsco’s first entry into the U.S. Midwest.
Founded in Chicago in 1935, TEC is one of the largest HVAC distributors in North America with sales of $291 million in 2020. TEC serves approximately 10,000 customers from 32 locations in Illinois, Indiana, Wisconsin, Kansas, Michigan, Minnesota and Missouri. Its product offering includes various brands of residential, light-commercial and applied HVAC equipment made by Carrier as well as complimentary systems, parts, supplies and accessories sourced from approximately 1,200 vendors.
TEC will operate as an independent business as an addition to the highly-successful group of joint ventures between Watsco and Carrier, a collaboration that has provided growth and value for both companies over the last several years. Watsco will own 80 percent of TEC and Carrier 20 percent. Closing of the transaction is subject to customary conditions and is expected to occur within the next 30 days.
“TEC is one of the most iconic, entrepreneurial, long-standing family businesses in our industry. Skip Mungo and his team have built a great company and they will continue TEC’s focus on growth with their name, identity and unique culture in what will be new markets for our company," Watsco Chairman and CEO Albert H. Nahmad, said. "We look forward to supporting their growth with capital, ideas, technology and our industry relationships to build on their historical success. We are pleased to become part of the TEC family.”
Skip Mungo, TEC president and CEO added, “We are excited to become a member of the Watsco family and provide the catalyst for growth in the Midwest. Partnering with Watsco will enable us to think bigger while retaining our unique culture and approach to the market. We look forward to launching their innovative technology platforms over time to support our customers, complementing the historical capabilities and customer focus that is at the heart of TEC’s culture.”
Watsco’s Buy and Build Growth Strategy
Watsco has acquired 63 businesses since 1989, most of which were successful, multi-generation, family-owned businesses. Watsco’s “buy and build” strategy can be summarized in the following ways:
The company is actively seeking additional opportunities to invest and grow through acquisitions given its relative low market share of the estimated $40 billion North American distribution marketplace for HVAC/R products.