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Ingersoll-Rand to dispose Hussmann

New York, US:  Ingersoll-Rand put its Hussmann refrigeration business up for private sale according to a Reuters report.

The Hussmann unit, which provides supermarkets and food retailers with display cases, refrigeration systems and beverage coolers, would likely fetch under US$1bn, two of Reuters sources said.

The refrigeration display business is considered highly cyclical and exposed to rising raw material costs. Grocery stores and other food retailers held back on new investment during the recent economic downturn, weighing on margins for Hussmann and its rivals says Reuters.

Several parties are interested, including private equity firm Warburg Pincus LLC, and the auction has advanced to the second round, one of the sources and a third source familiar with the matter told the news wire.

Interest in the business has been driven mostly by private equity, one source said. The people asked not to be identified because the auction is not public. Representatives for Ingersoll-Rand, J P Morgan, which is advising on the sale, and Warburg Pincus declined to comment.

The potential sale of Hussmann would be Ingersoll-Rand’s second asset sale in less than a year in a sector that has suffered from slow capital spending by supermarkets and high raw material costs. The company sold its KOXKA European refrigerated display business in late 2010 to a unit of American Industrial Acquisition Corporation.

Hussmann, founded in 1906 by Harry Hussmann, was sold to Ingersoll-Rand in 2000 for US$1.55bn in cash.

Ingersoll does not break out Hussmann revenues, but the conglomerate’s refrigeration equipment business, which also includes Thermo King transport equipment, recorded 2010 sales of $1.9b.

Bernstein Research analyst Steven Winoker wrote in a note on 4 March that Hussmann’s days in Ingersoll-Rand’s portfolio appeared to be numbered, saying that the conglomerate would need to make significantly new investment to improve Hussmann’s margins.