Honeywell (NASDAQ:HON) announced today that it would acquire Air Products’ (NYSE:APD) liquefied natural gas (LNG) process technology and equipment business for $1.81 billion in an all-cash deal, which is approximately 13 times the estimated 2024 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).
Honeywell’s Acquisition Rationale
This marks Honeywell’s fourth acquisition this year, and acquiring this business will enable the company to offer a comprehensive solution for managing energy transformation. Furthermore, Honeywell will expand its portfolio with LNG technologies such as heat exchangers and cryogenic equipment. Integrating APD’s LNG process technology into Honeywell’s portfolio will enhance the efficient, reliable, and optimized management of natural gas assets.
The acquisition is expected to bolster Honeywell’s adjusted earnings per share in the first year and is anticipated to close by the end of this year.
Honeywell Is on an Acquisition Spree
Honeywell is actively pursuing acquisitions as part of its disciplined capital deployment strategy. Last month, the industrial conglomerate announced the acquisition of CAES Systems for $1.9 billion. Additionally, the company completed the acquisition of Carrier Global Corporation’s (NYSE:CARR) Global Access Solutions business for $4.95 billion.
What Is the Forecast for Honeywell Stock?
Analysts remain cautiously optimistic about HON stock, with a Moderate Buy consensus rating based on nine Buys and six Holds. Over the past year, HON has increased by 3.6%, and the average HON price target of $227 implies an upside potential of 7.8% from current levels.
