Honeywell International Inc. and Air Products & Chemicals Inc. have entered an agreement for the former to acquire Air Products’ liquefied-natural-gas-processing technology and equipment for $1.81 billion in an all-cash deal.
Honeywell’s stock HON -0.49% dipped 0.3% premarket on the news, while Air Products APD, -0.08% shares were up 2%.
The price is equal to about 13 times the estimated 2024 earnings before interest, taxes, depreciation and amortization (Ebitda) the companies said in a joint statement.
The deal will allow Honeywell “to offer customers a comprehensive, top-tier solution for managing their energy transformation journey,” their statement read.
Currently, Honeywell provides a pre-treatment solution serving LNG customers globally. The deal will add a portfolio that includes in-house design and manufacturing of coil-wound heat exchangers and related equipment.
“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,” Honeywell Chief Executive Vimal Kapur said in prepared remarks.
The deal is expected to boost adjusted per-share earnings in the first full year after closing and is expected to close before year-end. It’s not subject to any financing conditions.
The Air Products’ LNG business has about 475 employees and is based in Allentown, Penn. The company has a 390,000 sq. ft. facility in Port Manatee, Fla.
The deal is the fourth by Honeywell this year as the company moves to drive growth while aligning with three megatrends of automation, the future of aviation and energy transition.
In June, the aerospace and defence company announced plans to acquire CAES Systems from private-equity firm Advent International, for about $2 billion. CAES, headquartered in Arlington, Va., designs, develops and tests electronics ranging from antenna systems to communication networks for aerospace and defence companies.
In March, Honeywell said it would acquire Italy’s Civitanavi Systems, an aircraft-components manufacturer and developer.
In June, the company announced the closing of its $4.95 billion acquisition of Carrier Global Corporation’s global access solutions business.
Honeywell’s stock is up 0.4% in the year to date, while the S&P 500 SPX has gained 17%.