Honeywell’s $1.81B Power Play

Shivani Kumaresan | July 10, 2024

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Honeywell International Inc (NASDAQ:HON) has agreed to acquire Air Products And Chemicals, Inc.’s (NYSE:APD) liquefied natural gas (LNG) process technology and equipment business for $1.81 billion in an all-cash transaction.

This acquisition, which is approximately 13 times the estimated 2024 EBITDA, will significantly enhance Honeywell’s energy transformation offerings.

The acquisition will enable Honeywell to offer a comprehensive solution for managing energy transformation, including natural gas pre-treatment and advanced liquefaction technologies.

These services will be integrated under the Honeywell Forge and Experion platforms, providing efficient and reliable management of natural gas assets.

Honeywell’s existing pre-treatment solutions for LNG customers will be complemented by Air Products’ portfolio, which includes the design and manufacturing of coil-wound heat exchangers (CWHE) and related equipment.

CWHEs are known for their high throughput and compact, reliable operations both onshore and offshore.

Honeywell CEO Vimal Kapur said, “While the world continues to build the renewables-based energy infrastructure of the future, natural gas is a critical lower-emission and affordable transition fuel that will help meet ever-increasing and dynamic global energy demands.”

This transaction is expected to be adjusted earnings per share accretive in the first full year of ownership. The deal is expected to close by the end of the year, pending regulatory approvals.

This acquisition is Honeywell’s fourth this year, aligning with its strategy to invest in high-return opportunities across automation, aviation, and energy transition.

Ken West, President and CEO of Honeywell’s Energy and Sustainability Solutions (ESS) segment, said, “The integration of this talented team and the acquired proprietary technologies will enable Honeywell UOP to bring a full spectrum of scalable solutions and services that help our global customers navigate the complex journey to more sustainable and efficient energy practices.”

Honeywell has committed to deploying at least $25 billion towards mergers and acquisitions in the coming years, reported the Wall Street Journal. The global demand for LNG is projected to increase by more than 50% by 2040, according to Shell PLC (NYSE:SHEL).

The unit Honeywell is acquiring employs roughly 475 people and has been driven by rising demand from power and data centers.

Last month, Honeywell announced a $2 billion deal to buy CAES Systems, an aerospace-and-defense technology company.

Honeywell stock has gained more than 1% in the last 12 months. Investors can gain exposure to the stock via Gabelli Commercial Aerospace And Defense ETF (NYSE:GCAD) and Invesco Aerospace & Defense ETF (NYSE:PPA).

Price Action: HON shares are trading lower by 0.28% at $210.00, while APD is up 0.79% at $256.71 at last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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