M&A News: Honeywell Snaps Up CAES Systems for $2B

Honeywell (NASDAQ:HON) shares are in focus today after the technology and manufacturing solutions provider agreed to acquire CAES Systems in a nearly $2 billion deal. The transaction promises to boost Honeywell’s presence in the defense sector.

Details on Honeywell’s Newest Defense Acquisition

Honeywell is acquiring CAES from private equity major Advent International. The all-cash deal points to a nearly 14x multiple over CAES’ estimated 2024 tax-adjusted EBITDA. Importantly, the strategic move promises to boost Honeywell’s defense technology solutions across land, sea, air, and space. Moreover, the deal could enhance Honeywell’s current production capabilities on the F-35, EA-18G, and AMRAAM platforms while adding solutions for new platforms such as Navy Radar, UAS, and C-UAS to the company’s portfolio.

Honeywell expects these programs to experience significant growth in the years to come. This, in turn, will boost the company’s Aerospace Technologies business. The addition of CAES’ radio frequency technologies and 13 facilities in North America could also open the door to further market share gains for Honeywell.

This Is Honeywell’s Second Defense Transaction

Moreover, this is Honeywell’s second transaction in the defense space in recent times. Earlier this year, Honeywell announced the acquisition of aircraft components maker Civitanavi Systems. The company’s actions come amid an elevated focus on defense spending globally. Honeywell itself is sitting on an order backlog north of $30 billion at present.

Meanwhile, the CAES acquisition is expected to be accretive to Honeywell’s bottom line in the first full year of ownership. The transaction is estimated to close in H2 2024.

What Is the Target Price for Honeywell Stock?

Honeywell’s share price has eked out a nearly 6.5% gain over the past three months. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average HON price target of $229.21.

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