On July 11, 2024, Charlotte, North Carolina, USA – Honeywell (NASDAQ: HON) and Air Products (NYSE: APD) jointly announced that Honeywell has agreed to acquire Air Products’ liquefied natural gas (LNG) process technology and equipment business for $1.81 billion in cash. The acquisition amount is approximately 13 times the expected EBITDA of the business in 2024.
After the transaction is completed, Honeywell will be able to provide customers with a comprehensive and high-end solution to help them achieve their energy transition journey. This new overall solution will cover natural gas pretreatment and advanced liquefaction technology, utilizing interconnected services and expertise ® Unified digital automation technology for the platform. This comprehensive service solution enables efficient, reliable, and optimized natural gas asset management, providing unexpected value and support.
At present, Honeywell provides pre-treatment solutions for global liquefied natural gas customers, complementing Air Products’ liquefied natural gas process technology and equipment business to form a complete product portfolio, including independent design and manufacturing of coiled tube heat exchangers (CWHE) and related equipment. The coiled tube heat exchanger can provide the highest natural gas throughput in a single exchanger with a small footprint, and can achieve reliable, stable, and safe operation both on land and at sea.
Although countries around the world are continuing to build future renewable energy based infrastructure, natural gas, as a key low emission and affordable transition fuel, still helps meet the growing and ever-changing global energy demand, “said Vimal Kapur, Chairman and CEO of Honeywell.” This highly complementary acquisition will further strengthen our energy transformation product portfolio. Air Products’ coiled tube heat exchanger technology will immediately expand our base of users and create new opportunities for compound growth in after-sales service and digitization through an interconnected service platform
We have decided to divest our liquefied natural gas heat exchanger technology and equipment business, which reflects Air Products’ continued focus on two pillar strategies – developing our core industrial gas business and related technologies and equipment, and becoming a leader in providing clean hydrogen on a large scale to achieve decarbonization in the industrial and heavy transportation industries. “Air Products Chairman, President, and CEO Seifi Ghasemi said,” The liquefied natural gas business is a great business. With the excellent work of our employees and decades of development, it is currently at its peak and will continue to excel as part of Honeywell’s technology portfolio. “Industry research shows that in the past 20 years, the global liquefied natural gas market has expanded fourfold. It is expected to double in the next 20 years, This is mainly due to the demand of key end markets, including electricity and data centers.
Ken West, President and CEO of Honeywell Energy and Sustainable Technologies, said, “The integration of this excellent team and the proprietary technology acquired will empower Honeywell UOP to bring comprehensive and scalable solutions and services, helping our global customers achieve more sustainable and efficient energy practices in their complex transformation journeys.
The liquefied natural gas business headquarters of Air Products is located in Allentown, Pennsylvania, USA, with approximately 475 employees. It has a manufacturing plant of 390000 square feet (approximately 36000 square meters) in Manatee Port, Florida, USA, producing various specifications of coiled tube heat exchangers. This is Honeywell’s fourth acquisition announced this year as part of its rigorous capital deployment strategy. The company focuses on high return acquisitions, which will drive the future growth of its investment portfolio and align with the three major development trends of automation, future aviation, and energy transformation.
This transaction is expected to achieve an increase in adjusted earnings per share in the first full year after the acquisition is completed, without any financing conditions, and is expected to be completed within a calendar year, subject to general delivery conditions, including approval from relevant regulatory authorities.
