Honeywell to acquire Air Products' LNG biz for $1.81 bn

Automation, aviation and energy transition company Honeywell has acquired US-based Air Products’ liquefied natural gas (LNG) process technology and equipment business for $1.81 billion in an all-cash transaction, representing around 13x its estimated 2024 EBITDA. Honeywell says the acquisition will allow it to offer customers a comprehensive, top-tier solution for managing its energy transformation journey.

This is the fourth acquisition Honeywell has announced this year as part of its disciplined capital deployment strategy.

The acquisition covers natural gas pre-treatment and state-of-the-art liquefaction, utilising digital automation technologies unified under the Honeywell Forge and Experion platforms. Honeywell says the new offerings will enable efficient, reliable and optimised management of natural gas assets.

Currently, Honeywell provides a pre-treatment solution to its LNG customers globally. Air Products’ 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.

CWHEs provide the highest throughput of natural gas in a single exchanger while ensuring safe operations both onshore and offshore. “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,” said Vimal Kapur, Chairman and CEO of Honeywell.

“This highly complementary acquisition will further strengthen our energy transition portfolio, and Air Products’ CWHE technology will immediately expand our installed base - creating new opportunities to compound growth in aftermarket services and digitalisation through our Honeywell Forge platform,” Kapur adds.

“The decision to divest our LNG heat exchanger technology and equipment business reflects Air Products’ continued focus on its two-pillar strategy -- to grow our core industrial gas business and related technology and equipment, and to be a first-mover delivering clean hydrogen at scale to decarbonize industrial and heavy-duty transportation sectors,” said Air Products’ chairman, president and CEO Seifi Ghasemi.

“The LNG business is a great business and at its strongest point in its decades-long history thanks to the outstanding work of our people, and they will be in good hands to advance as part of Honeywell’s related portfolio of technologies.”

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 according to industry research. Ken West, President and CEO of Honeywell’s Energy and Sustainability Solutions (ESS) segment, said, “The integration of this talented team and the acquired proprietary technologies will enable Honeywell UOP to bring a full spectrum of scalable solutions and services that help our global customers navigate the complex journey to more sustainable and efficient energy practices.”

Air Products’ LNG Business has around 475 employees, with headquarters in Allentown, Pennsylvania and a 390,000-square-foot manufacturing facility in Port Manatee, Florida, where all sizes of CWHEs are made.

"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," the company says.

The transaction is not subject to any financing conditions and is expected to close before the end of the calendar year, subject to customary closing conditions, the company adds.