Honeywell to acquire Air Products’ LNG business for $1.8bn to enhance energy transition services

In a strategic move to bolster its energy transition capabilities, Honeywell has announced the acquisition of Air Products’ Liquefied Natural Gas (LNG) process technology and equipment business for $1.81 billion in an all-cash transaction. This acquisition is expected to significantly enhance Honeywell’s offerings, allowing it to provide customers worldwide with a comprehensive solution for managing their energy transformation journey.

The transaction, valued at approximately 13 times the estimated 2024 EBITDA, is anticipated to be immediately accretive to Honeywell’s sales growth and segment margin. Moreover, it is expected to positively impact Honeywell’s adjusted earnings per share (EPS) in the first full year post-acquisition.

Air Products, renowned for its industrial gas business, will continue to focus on its core sectors and the development of clean hydrogen technology for the energy transition. Seifi Ghasemi, Chairman, President, and CEO of Air Products, stated, “This decision aligns with our two-pillar strategy to not only expand our industrial gas operations but also to pioneer in providing scalable clean hydrogen solutions.”

Strategic Benefits of the Acquisition

– Comprehensive Energy Solutions: The integration of Air Products’ LNG technology with Honeywell’s existing offerings will provide a seamless, top-tier solution for natural gas pre-treatment and liquefaction. This will include the use of advanced digital automation technologies under the Honeywell Forge and Experion platforms.

– Enhanced Market Position: The acquisition will strengthen Honeywell’s position in the energy market, adding robust, reliable coil-wound heat exchangers (CWHE) technology to its portfolio, which is crucial for both onshore and offshore natural gas processing.

– Growth in Aftermarket Services: Honeywell anticipates new opportunities for growth in aftermarket services and innovation in software solutions, spurred by the expanded installed base of CWHE technology.

Vimal Kapur, Chairman and CEO of Honeywell, emphasized the strategic fit of the acquisition, noting, “This acquisition not only enhances our ability to meet dynamic global energy demands but also strengthens our energy transition portfolio, opening new avenues for growth and technology integration.”

The LNG market has seen substantial growth over the past two decades and is expected to continue expanding, driven by increasing demand in power generation and data centers. Honeywell’s acquisition positions it to capitalize on this growth, enhancing its ability to offer scalable and efficient energy solutions globally.

Ken West, President and CEO of Honeywell’s Energy and Sustainability Solutions segment, remarked on the integration, stating, “The addition of Air Products’ LNG business will enable Honeywell UOP to offer a full spectrum of scalable solutions that address the complex challenges of sustainable energy practices.”

The acquisition is part of Honeywell’s disciplined capital deployment strategy, which focuses on high-return investments that align with major global trends such as automation, aviation innovation, and energy transition. The transaction is expected to close by the end of the calendar year, pending regulatory approvals.