HONEYWELL to acquire ELSTER

The acquisition will be for approximately $5.1 billion

July 29, 2015. By Moulin

Honeywell has announced that it has signed adefinitive agreement to acquire the Elster Division of Melrose Industries plc for approximately $5.1 billion. Elster consensus sales for 2015 are estimated to be $1.8 billion. The price translates to approximately12.6 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 share owner vote.

“The acquisition of Elster will generate strong future turns for Honeywell’s shareowners because it increases our growth profile globally– creating both organic and in organic 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 $12billionin 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.”

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