Honeywell, a global industrial conglomerate, has recently announced its acquisition of the LNG process technology and equipment business of Air Products in a £1.81 billion all-cash deal. This strategic move is part of Honeywell’s efforts to enhance its capabilities in the energy transition sector.
The acquisition, valued at approximately 13 times the estimated 2024 earnings before tax, depreciation, and amortization (EBITDA) of the business, is expected to provide Honeywell with an end-to-end offering for customers worldwide. According to Honeywell, the transaction is projected to be accretive to the company’s adjusted earnings per share in the first full year of ownership and is not subject to any financing conditions. The deal is expected to close before the end of the year, pending customary closing conditions and regulatory approvals.
Currently, Honeywell offers a pre-treatment solution serving LNG customers globally. With the addition of Air Products’ LNG process technology and equipment business, which includes in-house design and manufacturing of coil-wound heat exchangers (CWHE) and related equipment, Honeywell aims to further strengthen its position in the LNG market.
Vimal Kapur, Chairman and Chief Executive of Honeywell, emphasized the importance of natural gas as a lower-emission and affordable transition fuel amidst the ongoing global shift towards renewables-based energy infrastructure. He stated, “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.”
Industry research from Deloitte UK indicates that the LNG market has quadrupled over the past 20 years and is projected to double over the next two decades, driven by demand in key end markets such as power and data centres. This growth trajectory underscores the significance of Honeywell’s strategic acquisition of Air Products’ LNG technology.
The purchase of Air Products’ LNG technology marks the fourth transaction that Honeywell has announced this year as part of its capital deployment strategy. The company remains focused on high-return acquisitions aligned with the megatrends of automation, the future of aviation, and energy transition.
Honeywell’s move to acquire Air Products’ LNG technology reflects its commitment to driving future growth across its portfolio and further establishing its presence in key sectors. This acquisition will undoubtedly contribute to Honeywell’s position as a leading player in the evolving energy landscape.
The acquisition is a significant development in the energy sector and demonstrates Honeywell’s proactive approach in adapting to the changing energy landscape. This strategic move is poised to have a lasting impact on the LNG market and contribute to the global energy transition. As Honeywell continues to diversify and expand its capabilities, the industry can expect to see further advancements in energy technology and infrastructure.
By Charles Kennedy for Oilprice.com
Charles Kennedy is a writer for Oilprice.com