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Welcome to our support website for the business case “Differentiation Beyond Price: CD&R’s Strategy in Acquiring Hussmann”.

Read an inspection copy of the case.


Summary

In 2011, Ingersoll-Rand (IR) decided to divest its refrigeration equipment subsidiary, Hussmann International. However, the routine auction process for the non-core asset went awry when both Hussmann’s performance and external finance markets weakened significantly during the due diligence period. IR’s agent, JP Morgan, sought interest from potential buyers and focused on a few leading buy-out firms that submitted bids. After not seeing eye-to-eye with the initial auction winner, Ingersoll-Rand engaged exclusively with a lower bidder, the private equity firm Clayton, Dubilier & Rice.
The challenge for CD&R is to develop a deal structure that can meet both parties’ needs, offering enough value to Ingersoll-Rand to keep them from walking away, yet taking into account the increased riskiness of Hussmann’s recent performance to justify CD&R’s valuation. The student takes the perspective of CD&R.
 

Teaching objectives

This case aims to build students’ awareness of the challenging PE landscape and shows how one PE firm has found new ways to source and structure deals in order to maintain attractive returns in an overpriced acquisition atmosphere. Successful strategies to outperform in an overheated market are rare, but leading firms find ways to gain sourcing advantage and/or utilize skills to improve underperforming businesses to drive them to the top return quartile. The case examines both return strategies with an inside look at Clayton, Dubilier & Rice’s “recipe for bubbles”.
 

How to buy the case

  • Hard and soft copies of the case and teaching note (which contains the login and password to access the private area of this site) can be purchased via our distributors’ websites. To choose a distributor please visit the INSEAD Case Distributors page.
  • The case can also be purchased directly from INSEAD.
  • If you are not a registered instructor, follow the instructions on our distributors’ websites to identify yourself as such.

 

 

 


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