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Honeywell (HON) to Acquire Air Products' LNG Process Business
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Honeywell International Inc. (HON - Free Report) has inked a deal to acquire Air Products and Chemicals, Inc.’s (APD - Free Report) liquefied natural gas (LNG) process technology and equipment business for $1.81 billion in cash. This marks Honeywell’s fourth acquisition announcement so far this year.
HON’s shares gained 1.9% yesterday to eventually close the trading session at $214.49.
Based in Pennsylvania, Air Products is engaged in producing atmospheric gases, process gases and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food and metals. Its LNG technology and equipment business is based in Allentown, PA, and currently employs about 475 people.
Acquisition Rationale
The latest buyout is in sync with Honeywell’s policy of acquiring businesses to strengthen its business and expand its market share. The inclusion of LNG process technology and equipment business expertise in in-house design and manufacturing of coil-wound heat exchangers and related equipment portfolio will boost HON’s energy transition portfolio. This acquisition will enable Honeywell to offer a comprehensive solution for its customers’ energy transformation needs.
HON's energy transition solution will include natural gas pre-treatment and advanced liquefaction that leverages advanced digital automation technologies within the Honeywell Forge and Experion platforms. This all-in-one solution will facilitate its customers in managing natural gas assets easily and efficiently.
Subject to regulatory approvals and customary closing conditions, the acquisition is expected to close before the end of 2024. The company expects the buyout to be accretive to its revenue growth and adjusted earnings per share in the first full year of possession.
Other Notable Buyouts
Acquisitions are an essential aspect of Honeywell's growth strategy. In June 2024, the company inked a deal to acquire CAES Systems Holdings LLC from private equity firm Advent International for about $1.9 billion in cash. The transaction will augment HON's defense technology offerings across various domains, including land, sea, air and space.
In the same month, HON acquired Carrier’s Global Access Solutions business for an all-cash deal of $4.95 billion. The inclusion of Global Access Solutions’ expertise in advanced access and security solutions, coupled with its impressive growth and margin profile, will enable Honeywell to expand its security products portfolio and boost its building automation segment. In March 2024, HON announced its plan to purchase Civitanavi Systems S.p.A. for about €200 million ($217 million) to boost its portfolio of aerospace navigation solutions.
Zacks Rank and Price Performance
Honeywell currently carries a Zacks Rank #3 (Hold). The stock has risen 2.7% in the past year compared with the industry’s 10.6% growth.
Image Source: Zacks Investment Research
Strength in the commercial aviation, building automation and UOP businesses augurs well for Honeywell. A strong commercial aftermarket and solid commercial aviation demand led by strength in the air transport aftermarket are aiding the Aerospace segment.
However, HON’s Industrial Automation segment remains notably weak due to lower volumes in the warehouse and workflow solutions business. High costs and expenses, owing to an increase in material and labor costs, may affect its margins and profitability.
Stocks to Consider
Some better-ranked companies from the Conglomerates sector are discussed below:
Image: Bigstock
Honeywell (HON) to Acquire Air Products' LNG Process Business
Honeywell International Inc. (HON - Free Report) has inked a deal to acquire Air Products and Chemicals, Inc.’s (APD - Free Report) liquefied natural gas (LNG) process technology and equipment business for $1.81 billion in cash. This marks Honeywell’s fourth acquisition announcement so far this year.
HON’s shares gained 1.9% yesterday to eventually close the trading session at $214.49.
Based in Pennsylvania, Air Products is engaged in producing atmospheric gases, process gases and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food and metals. Its LNG technology and equipment business is based in Allentown, PA, and currently employs about 475 people.
Acquisition Rationale
The latest buyout is in sync with Honeywell’s policy of acquiring businesses to strengthen its business and expand its market share. The inclusion of LNG process technology and equipment business expertise in in-house design and manufacturing of coil-wound heat exchangers and related equipment portfolio will boost HON’s energy transition portfolio. This acquisition will enable Honeywell to offer a comprehensive solution for its customers’ energy transformation needs.
HON's energy transition solution will include natural gas pre-treatment and advanced liquefaction that leverages advanced digital automation technologies within the Honeywell Forge and Experion platforms. This all-in-one solution will facilitate its customers in managing natural gas assets easily and efficiently.
Subject to regulatory approvals and customary closing conditions, the acquisition is expected to close before the end of 2024. The company expects the buyout to be accretive to its revenue growth and adjusted earnings per share in the first full year of possession.
Other Notable Buyouts
Acquisitions are an essential aspect of Honeywell's growth strategy. In June 2024, the company inked a deal to acquire CAES Systems Holdings LLC from private equity firm Advent International for about $1.9 billion in cash. The transaction will augment HON's defense technology offerings across various domains, including land, sea, air and space.
In the same month, HON acquired Carrier’s Global Access Solutions business for an all-cash deal of $4.95 billion. The inclusion of Global Access Solutions’ expertise in advanced access and security solutions, coupled with its impressive growth and margin profile, will enable Honeywell to expand its security products portfolio and boost its building automation segment. In March 2024, HON announced its plan to purchase Civitanavi Systems S.p.A. for about €200 million ($217 million) to boost its portfolio of aerospace navigation solutions.
Zacks Rank and Price Performance
Honeywell currently carries a Zacks Rank #3 (Hold). The stock has risen 2.7% in the past year compared with the industry’s 10.6% growth.
Image Source: Zacks Investment Research
Strength in the commercial aviation, building automation and UOP businesses augurs well for Honeywell. A strong commercial aftermarket and solid commercial aviation demand led by strength in the air transport aftermarket are aiding the Aerospace segment.
However, HON’s Industrial Automation segment remains notably weak due to lower volumes in the warehouse and workflow solutions business. High costs and expenses, owing to an increase in material and labor costs, may affect its margins and profitability.
Stocks to Consider
Some better-ranked companies from the Conglomerates sector are discussed below:
Carlisle Companies Incorporated (CSL - Free Report) presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 17%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CSL’s 2024 earnings has increased 2.2% in the past 60 days. Shares of Carlisle have gained 57.9% in the past year.
Griffon Corporation (GFF - Free Report) presently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 33.5%.
In the past 60 days, the Zacks Consensus Estimate for GFF’s 2024 earnings has increased 4.2%. The stock has risen 52.6% in the past year.