- Attractive Portfolio With Great Positions in Good
Industries
- Differentiated Gas Technologies Fit Strongly with Honeywell
Portfolio and Customers
- Gas, Water, and Electricity Metering Add Attractive
Adjacencies
- Energy Efficiency Focus Connects to Honeywell's
Global Growth Strategy
- Enhances Honeywell's Profile in High Growth Regions
- Creates New Platform for Organic and Inorganic
Growth
- No Impact to 2015 Guidance; Minor Dilutive Impact to 2016
EPS
MORRISTOWN, New Jersey,
July 28, 2015 /PRNewswire/ --
Honeywell (NYSE: HON) today announced that it has signed a
definitive agreement to acquire the Elster Division of Melrose
Industries plc, a leading provider of thermal gas solutions for
commercial, industrial, and residential heating systems and gas,
water, and electricity meters, including smart meters and software
and data analytics solutions, for approximately $5.1 billion. Elster also manufactures flow
computers and regulators for the gas industry. Elster consensus
sales for 2015 are estimated to be $1.8
billion. The price translates to approximately 12.6 times
Elster's estimated 2015 consensus earnings before interest, taxes,
depreciation, and amortization (EBITDA), and the acquisition is
anticipated to occur in the first quarter of 2016. The agreement is
subject to customary closing conditions, including regulatory
review and Melrose shareowner vote.
"The acquisition of Elster will generate strong future returns
for Honeywell's shareowners because it increases our growth profile
globally – creating both organic and inorganic growth opportunities
– and because Honeywell can run this company effectively and
accelerate its growth through our complementary technologies,
software knowledge, and presence in High Growth Regions," said
Honeywell Chairman and CEO Dave
Cote. "Elster has outstanding technologies, brands, energy
efficiency know-how, and global presence, all of which we are very
well-positioned to build on. Elster also creates a new platform for
acquisition targets for Honeywell that will be additive to the
business' growth and global presence. We will see immediate
benefits to Honeywell's portfolio, accelerating into 2016 and 2017.
This is a great acquisition for Honeywell and our shareowners."
"The Elster acquisition proves that we are staying true to our
disciplined M&A approach and integration processes because it's
a model that has worked very well for us," said Cote. "During the
past decade, we have completed more than 80 acquisitions adding
approximately $12 billion in
revenues. We will continue to look for good acquisitions to enhance
our growth profile. We see Elster as a great opportunity to deploy
our operating model and key process initiatives to grow the
business, enhance our position globally, and drive significant
returns to shareowners over the long-term. The Honeywell Operating
System (HOS) will be a major factor in creating new synergies that
will increase the growth and profitability of each of Elster's
businesses."
Elster employs approximately 6,800 people with major locations
in the United States, Germany, the United
Kingdom, and Slovakia. The
company maintains an impressive installed base with more than 200
million metering modules deployed over the course of the last 10
years alone.
"This acquisition will allow us to improve customer value with
technologies and lifecycle management solutions for industrial end
users served by Honeywell's Environmental Combustion and Controls
and Process Solutions businesses," continued Cote. "Elster's gas
business offers products in high demand among natural gas customers
and brings a strong, global distribution network and numerous
cross-selling opportunities for existing Honeywell technologies to
new customers in both developed and High Growth Regions."
"Elster's gas, electric, and water meters are highly valued for
their reliability, safety, and accuracy. Elster has a world-class
reputation for delivering on the operational efficiency and
regulatory certification requirements of utility customers
globally. We expect that energy efficiency initiatives and mandates
and the increased need for natural resource management will drive
meaningful and sustained growth for Honeywell in the metering
segment. Utility metering in particular is rapidly evolving as new
'smart' technologies and software and data analytics capabilities
are becoming adopted around the world and we expect strong growth
from this segment globally. Elster's differentiated technologies,
extensive industry expertise, and relationship with utility
customers globally – combined with their strong positions in the
highly regulated heating, controls, and metering segments – are a
great fit for Honeywell's portfolio," concluded Cote.
There is no change to the 2015 full year guidance Honeywell
provided in its second quarter earnings release. Honeywell expects
that the dilutive impact of the transaction on its 2016 Earnings
Per Share to be minor.
Honeywell will discuss the proposed acquisition of Elster during
an investor conference call today starting at 9:00 a.m. EDT. To participate, please dial (800)
500-0920 (domestic) or (719) 457-2677 (international) approximately
ten minutes before the 9:00 a.m. EDT
start. Please mention to the operator that you are dialing in for
Honeywell's investor conference call or provide the conference code
2329021. The live webcast of the investor call as well as related
presentation materials will be available through the "Investor
Relations" section of the company's Website
(www.honeywell.com/investor). Investors can hear a replay of the
conference call from 12:30 p.m. EDT,
July 28, until 12:30 p.m. EDT, August
4, by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 2329021.
Honeywell (www.honeywell.com) is a Fortune 100 diversified
technology and manufacturing leader, serving customers worldwide
with aerospace products and services; control technologies for
buildings, homes, and industry; turbochargers; and performance
materials. For more news and information on Honeywell, please visit
www.honeywellnow.com.
This release contains certain statements that may be deemed
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act of 1934. All statements, other than
statements of historical fact, that address activities, events or
developments that we or our management intends, expects, projects,
believes or anticipates will or may occur in the future are
forward-looking statements. Such statements are based upon certain
assumptions and assessments made by our management in light of
their experience and their perception of historical trends, current
economic and industry conditions, expected future developments and
other factors they believe to be appropriate. The forward-looking
statements included in this release are also subject to a number of
material risks and uncertainties, including but not limited to
economic, competitive, governmental, and technological factors
affecting our operations, markets, products, services and prices.
Such forward-looking statements are not guarantees of future
performance, and actual results, developments and business
decisions may differ from those envisaged by such forward-looking
statements. We identify the principal risks and uncertainties that
affect our performance in our Form 10-K and other filings with the
Securities and Exchange Commission.
Media
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Investor Relations
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Robert C. Ferris
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Mark Macaluso
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(973) 455-3388
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(973) 455-2222
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rob.ferris@honeywell.com
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mark.macaluso@honeywell.com
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