Honeywell Expands with $1.81 Billion Acquisition of Air Products’ LNG Unit

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Honeywell (HON.O) has announced its acquisition of Air Products’ liquefied natural-gas (LNG) process technology and equipment business for $1.81 billion in cash, marking its fourth acquisition this year. This move aims to enhance Honeywell’s LNG pretreatment capabilities by integrating technologies like heat exchangers and cryogenic equipment into its portfolio. This acquisition is strategically timed amidst increasing demand for LNG in critical sectors such as power generation and data centers.

The Energy Information Administration projects that U.S. LNG exports will grow from 12.2 billion cubic feet per day in 2024 to 14.3 bcfd in 2025, following a record 11.9 bcfd in 2023. Air Products’ cryogenic equipment and liquefaction processes are deployed both onshore and offshore, with its coil-wound heat exchangers recognized for enabling efficient liquefaction with minimal space requirements.

Sheila Kahyaoglu, an analyst at Jefferies, highlighted Honeywell’s commitment to strategic acquisitions, noting that with this transaction and others, Honeywell is poised to deploy approximately $15 billion in 2024. Since assuming the CEO role in June 2023, Vimal Kapur has directed Honeywell towards focusing on three major trends: automation, the future of aviation, and energy transition. Previously, Honeywell announced its acquisition of CAES Systems, a provider of aerospace and defense technology, for $1.9 billion.

The acquisition of Air Products’ LNG business is expected to contribute positively to Honeywell’s adjusted earnings per share within the first year of ownership, according to Kahyaoglu’s estimates, potentially increasing adjusted earnings by 1% in 2025. This deal also opens avenues for growth in aftermarket services and digitalization through Honeywell’s Forge platform.

Honeywell, with a market capitalization exceeding $137 billion, is a leading supplier of products, software, and services across various sectors including construction, aerospace, and industrial applications. Following the announcement, shares of both Air Products and Honeywell saw an increase of approximately 1% in early trading.