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Honeywell to Buy Air Products’ LNG Technology for $1.8 Billion

Honeywell has agreed to buy the LNG process technology and equipment business of Air Products in a $1.81 billion all-cash deal, as it looks to expand its energy transition capabilities, the industrial conglomerate said on Wednesday.

The value of the deal represents approximately 13 times the estimated 2024 earnings before tax, depreciation, and amortization (EBITDA) of the business.

Following the acquisition, Honeywell will have an end-to-end offering for customers worldwide.  

The transaction is expected to be accretive to Honeywell’s adjusted earnings per share in the first full year of ownership and is not subject to any financing conditions. It is expected to close before the end of the year, subject to customary closing conditions, including receipt of certain regulatory approvals, Honeywell said.

Currently, Honeywell provides a pre-treatment solution serving LNG customers globally.

Air Products’ complementary LNG process technology and equipment business consists of a comprehensive portfolio, including in-house design and manufacturing of coil-wound heat exchangers (CWHE) and related equipment, Honeywell and Air Products said in a joint statement.

Commenting on the deal, Honeywell’s chairman and chief executive Vimal Kapur said, 

“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.”

The LNG market has quadrupled over the past 20 years and is expected to double over the next two decades, driven by demand in key end markets including power and data centers, the companies said, citing industry research from Deloitte US.

Honeywell’s deal for LNG technology is the fourth transaction the industrial group has announced this year as part of its capital deployment strategy.

“The company is focused on high-return acquisitions that will drive future growth across its portfolio, which is aligned with the three compelling megatrends of automation, the future of aviation and energy transition,” it said.  

By Charles Kennedy for Oilprice.com

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