The acquisition strengthens Honeywell’s energy transition capabilities by building out end-to-end services for customers globally. The combination creates new opportunities for diversified growth and innovation in aftermarket services and software. The transaction is expected to be immediately accretive to Honeywell’s sales growth and segment margins, as well as accretive to adjusted EPS in the first full year following ownership. Air Products will continue to focus on its industrial gases business and related technologies and equipment to power the energy transition through clean hydrogen at scale.
CHARLOTTE, N.C. , July 10, 2024 /PRNewswire/ — Honeywell (Nasdaq: HON) and Air Products (NYSE:APD) jointly announced today that Honeywell has agreed to acquire Air Products’ liquefied natural gas (LNG) processing technology and equipment business for $1.81 billion in an all-cash transaction, representing approximately 13x estimated 2024 EBITDA.
This acquisition enables Honeywell to offer customers comprehensive, best-in-class solutions to manage their energy transformation initiatives. The new integrated offering includes natural gas pre-processing and state-of-the-art liquefaction, leveraging digital automation technologies integrated into the Honeywell Forge and Experion platforms. This full-service solution enables efficient, reliable and optimized management of natural gas assets while delivering unmatched value and support.
Today, Honeywell provides pre-processing solutions to LNG customers around the world. Air Products’ complementary LNG processing technologies and equipment business consists of a comprehensive portfolio that includes in-house design and manufacture of coil-wound heat exchangers (CWHE) and related equipment. CWHEs provide the highest natural gas processing capacity in a single exchanger with a small footprint, delivering robust, reliable and safe operation both onshore and offshore.
“As the world continues to build out the renewable energy-based energy infrastructure of the future, natural gas is a critical low-emission, affordable transition fuel to help meet the growing and dynamic global energy needs,” said Vimal Kapoor, Honeywell chairman and CEO.
“This highly complementary acquisition further strengthens our energy transition portfolio, with Air Products’ CWHE technology immediately expanding our installed base and creating new opportunities to accelerate the growth of aftermarket services and digitalization through the Honeywell Forge platform,” added Kapoor.
“The decision to sell our LNG heat exchanger technology and equipment business reflects Air Products’ continued focus on our two-pronged strategy of growing our core industrial gases business and related technologies and equipment, and pioneering the large-scale supply of clean hydrogen for the decarbonization of industrial and heavy transportation sectors,” said Seifi Ghassemi, Air Products’ chairman, president and chief executive officer. “The LNG business is a great business and is at the strongest point in its decades-old history thanks to the great work of our employees. They will move forward as part of Honeywell’s related technology portfolio.”
According to industry research, the LNG market has grown fourfold over the past 20 years and is expected to double over the next 20 years, driven by demand in key end markets such as power and data centers.1
“The integration of this talented team and the unique technologies we have acquired will enable Honeywell UOP to offer a broad range of scalable solutions and services to help customers around the world navigate their complex journey to more sustainable and efficient energy practices,” said Ken West, president and CEO of Honeywell’s Energy and Sustainability Solutions (ESS) division.
Air Products’ LNG business is headquartered in Allentown, Pennsylvania, and employs approximately 475 people. The company also has a 390,000 square foot manufacturing facility in Port Manatee, Florida, where CWHEs of all sizes are manufactured.
This is the fourth acquisition Honeywell has announced this year as part of its disciplined capital allocation strategy, as the company focuses on high-yield acquisitions that will drive future growth across its portfolio, aligned with three compelling megatrends: automation, the future of aviation and the energy transition.
The transaction, which is expected to be accretive to adjusted earnings per share in the first full year of ownership, is not subject to any financing conditions and is expected to close by calendar year end, subject to customary closing conditions, including receipt of certain regulatory approvals.
Editor’s Note: Link to Photo – A completed LNG heat exchanger manufactured at Air Products’ Port Manatee facility is loaded onto a carrier in Port Manatee for shipment to a customer.
1LNG Industry Trends | Deloitte US
About Honeywell
Honeywell is a diversified operating company serving a wide range of industries and geographies around the world. Our business is aligned with three powerful megatrends — automation, the future of aviation and the energy transition — and is powered by the Honeywell Accelerator Operating System and Honeywell Forge IoT Platform. As a trusted partner, we deliver practical solutions and innovations through our Aerospace Technology, Industrial Automation, Building Automation and Energy & Sustainability Solutions business segments to help organizations solve the world’s toughest and most complex challenges — making the world smarter, safer and more sustainable. For news and more information about Honeywell, visit www.honeywell.com/newsroom.
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Segment profit margin is defined as segment profit divided by net sales. Segment profit for Honeywell as a whole is defined as operating income excluding stock-based compensation expense, pension and other postretirement service expenses, amortization of acquisition-related intangible assets, certain acquisition-related charges, and repositioning and other expenses. Adjusted earnings per share is defined as diluted earnings per share excluding pension mark-to-market expense, amortization of acquisition-related intangible assets, certain acquisition-related charges, and other items set forth in the reconciliation schedule provided in disclosing adjusted earnings per share. EBITDA is defined as earnings before taxes, depreciation and amortization.
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About Air Products
Air Products (NYSE:APD) is a leading global industrial gas company with more than 80 years of experience, focused on serving energy, environmental and emerging markets. The company has two pillars of growth driven by sustainability. Air Products’ base business provides essential industrial gases, related equipment and application expertise to customers in dozens of industries, including refining, chemical, metals, electronics, manufacturing and food. The company also develops, designs, builds, owns and operates some of the world’s largest clean hydrogen projects supporting the transition to low- and zero-carbon energy in the heavy transportation and industrial sectors. Additionally, Air Products is a global leader in the supply of liquefied natural gas processing technology and equipment, providing turbomachinery, membrane systems and cryogenic vessels worldwide.
The company operates in approximately 50 countries, is expected to reach $12.6 billion in revenue in fiscal year 2023, and has a current market capitalization of over $50 billion. Approximately 23,000 passionate, talented and dedicated employees from diverse backgrounds are driven by Air Products’ higher purpose: to create innovative solutions that benefit the environment, advance sustainability and reimagine what’s possible to address the challenges facing our customers, communities and the world. For more information, visit www.airproducts.com or follow us on LinkedIn. XFacebook or Instagram .
Caution Regarding Forward-Looking Statements
This release contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the transaction that is the subject of this release and its expected impact and timing, and the Company’s business prospects and investment opportunities. These forward-looking statements are based on management’s expectations and assumptions as of the date of this release and are not guarantees of future performance. Although the forward-looking statements are made in good faith and are based on assumptions, expectations and projections that management believes to be reasonable based on the information currently available to it, actual performance and financial results may differ materially from the expectations and estimates expressed in the forward-looking statements due to a number of factors, including the risk factors described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 and other factors disclosed in our filings with the Securities and Exchange Commission. Except as required by law, the Company does not undertake any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect changes in the assumptions, beliefs or expectations on which the forward-looking statements are based, or changes in events, conditions or circumstances.
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