Honeywell Acquires Carrier’s Security Unit in a $4.95 Billion Deal

In a significant move, American industrial conglomerate Honeywell announced on Friday its plan to acquire the security unit of air conditioning maker Carrier for a whopping $4.95 billion. The all-cash acquisition furnishes Honeywell with an opportunity to strengthen its building safety business, which lately has been battling sluggish growth.

This is the largest transaction for Honeywell under the stewardship of recently appointed CEO, Vimal Kapur. The acquisition unlocks access to premier Carrier brands such as Onity, an electronic lock producer favored by numerous prominent hotel chains, and Supra, a maker of cloud-based lock systems. The security arm of Carrier, known as Access Solutions, delivers an array of security systems fit for residential, commercial, and industrial applications. Earlier in the year, rumors circulated about Carrier contemplating a spin-off of its fire and security business, as reported by Reuters.

“Strategically, this is a hand-in-glove acquisition for Honeywell. It was the most logical buyer and so this is not a surprise, although the multiple is certainly much higher as already noted.”

Nigel Coe, Wolfe Research analyst, via CNBC

Reacting to the news, the shares of the Florida-based Carrier experienced an uptick of 4.3%, reaching $55.17 in early trading. Conversely, Honeywell’s shares saw a slight decrease by approximately 1.4%.

The acquisition is set to fortify Honeywell’s building technologies portfolio, which has been grappling with diminished revenue growth this year due to lackluster demand. Despite these challenges, the company has managed to maintain robust overall performance, primarily buoyed by its thriving aviation business.

The closure of this all-cash transaction with Carrier is anticipated prior to the conclusion of the third quarter in 2024. The deal is predicted to trigger a positive impact on Honeywell’s cash earnings per share from the first complete year of ownership. Opting for fiscal discipline, Carrier plans to allocate the expected net proceeds from the deal, amounting to roughly $4 billion, toward reducing its debt. Notably, it’s pertinent to mention that the fire and security unit of Carrier contributed to nearly 17% of the company’s total sales in the previous year.