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Honeywell Acquires Air Products' LNG Process Business for $1.81B

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Honeywell International Inc. (HON - Free Report) has completed the acquisition of 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 so far this year.

HON’s shares lost 0.44% yesterday to eventually close the trading session at $206.71.

Headquartered in Pennsylvania, Air Products produces atmospheric, process and specialty gases for various industries, such as refining, chemicals and healthcare. Its LNG technology and equipment division is located in Allentown, PA. This division currently employs around 475 people.

Acquisition Rationale of Honeywell

The recent acquisition aligns with Honeywell’s strategy of acquiring businesses to enhance its operations and expand its market presence. 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 its energy transition portfolio. This buyout will allow Honeywell to provide a more comprehensive solution for its customers’ energy transformation requirements.

Honeywell’s energy transition solution will feature natural gas pre-treatment and advanced liquefaction, utilizing cutting-edge digital automation technologies from the Honeywell Forge and Experion platforms. This integrated solution will help customers manage their natural gas assets more easily and efficiently.

Other Notable Buyouts of Honeywell

Honeywell has been strengthening its business through acquisitions. In September 2024, HON acquired CAES Systems Holdings LLC (“CAES”) from private equity firm Advent. The transaction will augment its defense technology offerings across various domains, including land, sea, air and space.

In June 2024, the company 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.

HON’s Zacks Rank

Strength in the commercial aviation and building automation businesses augurs well for Honeywell. The Aerospace segment is particularly strong, driven by robust demand in the aviation aftermarket.

In the past year, this Zacks Rank #3 (Hold) company’s shares have gained 13.2% compared with the industry’s 21.3% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

However, weakness in the Industrial Automation segment due to lower demand for projects is worrisome. The weakened demand for personal protective equipment within the sensing and safety technologies business is also concerning.

Stocks to Consider

Some better-ranked companies are discussed below.

Carlisle Companies Incorporated (CSL - Free Report) currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CSL delivered a trailing four-quarter average earnings surprise of 16.3%. In the past 60 days, the Zacks Consensus Estimate for Carlisle’s 2024 earnings has increased 1.7%.

Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.

In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.

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