01—Abstract
Summary
Summary of the 8-K filed July 10, 2024. Cited figures are marked; the original filing is the authoritative source.
On July 10, 2024, Air Products & Chemicals (APD) disclosed that it has agreed to sell its liquefied natural gas (LNG) process technology and equipment business, along with associated assets and liabilities including a manufacturing facility in Port Manatee, Florida, to Honeywell (HON) for $1.81 billiona in cash, subject to customary closing adjustments.
The price represents roughly 13xb estimated 2024 EBITDA, and the transaction is not subject to financing conditions. Approximately 475 employees are expected to transfer to Honeywell at closing. The deal is a portfolio-pruning move consistent with Air Products' stated "two-pillar" strategy: growing its core industrial gases business and related technology and equipment, and developing clean hydrogen at scale.
Management characterized the LNG business as being at its strongest point in its decades-long history, so the divestiture is a strategic choice to exit a non-core activity rather than a response to distress. Investors should weigh the cash proceeds and any associated capital reallocation against the loss of an established, profitable equipment franchise, though the filing does not disclose the business's standalone revenue or earnings contribution. Closing is subject to customary conditions, including certain regulatory approvals, and the parties expect completion before the end of calendar 2024.
Air Products will provide transition services to Honeywell after closing. The filing contains no details on use of proceeds, tax effects, or a specific gain or loss estimate, so those items remain open questions for future disclosures.
02—Key points
Key Highlights
- Air Products agreed to sell its LNG process technology and equipment business, including the Port Manatee, Florida manufacturing facility, to Honeywell for $1.81 billion in cash.
- The purchase price equals approximately 13x estimated 2024 EBITDA, per the joint press release.
- Approximately 475 LNG Business employees are expected to join Honeywell at closing; the business is headquartered in Allentown, Pennsylvania.
- The transaction is not subject to financing conditions and is expected to close before the end of calendar 2024, subject to customary conditions and certain regulatory approvals.
- Air Products will provide customary transition services to Honeywell post-closing to support integration.
- Honeywell expects the deal to be immediately accretive to its sales growth and segment margin and adjusted EPS accretive in the first full year of ownership.
- The divestiture reflects Air Products' focus on its two-pillar strategy of core industrial gases and clean hydrogen at scale.
03—Questions
Frequently Asked Questions
How much is Air Products receiving for the LNG business?
Air Products will receive $1.81 billion in cash, subject to satisfaction or waiver of certain customary closing adjustments. The price is about 13x estimated 2024 EBITDA.
What assets are included in the sale?
The sale covers the LNG process technology and equipment business and associated assets and liabilities, including the 390,000-square-foot manufacturing facility in Port Manatee, Florida, where coil-wound heat exchangers are made.
When is the transaction expected to close, and what could delay it?
The parties expect closing before the end of calendar 2024. Closing depends on customary conditions, including receipt of certain regulatory approvals; the filing does not specify which approvals are required.
Why is Air Products selling a business it describes as strong?
Management said the divestiture reflects its focus on growing core industrial gases and related technology and equipment, and on delivering clean hydrogen at scale. The filing does not disclose the business's standalone financials, so the strategic rationale is management's stated view.
What does this mean for Honeywell and its strategy?
Honeywell plans to combine the CWHE technology with its natural gas pre-treatment offering to create an end-to-end LNG solution, expanding its installed base and aftermarket services and digitalization opportunities through its Honeywell Forge platform.
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