Honeywell to buy Air Products' LNG unit for $1.81 B as deal-making spree continues
Honeywell said on Wednesday it would buy Air Products' liquefied natural gas (LNG) process technology and equipment business for $1.81 B in cash, marking the industrial giant's fourth acquisition this year.
The deal would complement Honeywell's LNG pretreatment business by adding technologies such as heat exchangers and cryogenic equipment to its portfolio amid growing demand for the fuel in key end-markets, including power and data centers.
The Energy Information Administration (EIA) this week forecast average U.S. LNG exports would reach 12.2 Bft3d in 2024 and 14.3 Bft3d in 2025, up from a record 11.9 Bft3d in 2023.
Air Products' cryogenic equipment and natural gas liquefaction processes are used both onshore and offshore. Its coil-wound heat exchangers, part of the business being bought by Honeywell, are used for reliable liquefaction with minimal deck space requirement.
"With the addition of Air Products LNG and expected year-end close, Honeywell is on track to deploy ~$15 B in 2024 across M&A," said Sheila Kahyaoglu, analyst at Jefferies.
Since taking charge as CEO in June 2023, Vimal Kapur has steered Honeywell toward three "compelling mega trends": automation, the future of aviation and energy transition.
Last month, Honeywell announced a deal to buy aerospace and defense technology provider CAES Systems for $1.9 B.
The deal with Air Products is expected to boost Honeywell's adjusted earnings per share in the first full year of ownership. Kahyaoglu estimated the transaction could be 1% accretive to adjusted earnings in 2025.
The deal will create opportunities for growth in aftermarket services and digitalization through Honeywell's Forge platform.
Honeywell, with a market capitalization of more than $137 B, supplies products, software and services to various sectors, including construction, aerospace and industrial applications.
Shares of Air Products and Honeywell were both up about 1% in early trading.
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