Business
Honeywell Eyes upto $4 Billion Deals as Automation M&A Focus Grows
Honeywell is targeting acquisitions valued between $2 billion and $4 billion as it looks to grow its industrial automation business. Speaking at the company's investor day, executives said there are significant merger and acquisition opportunities within the automation sector, which operates in a roughly $35 billion market. Honeywell has spent about $14 billion on acquisitions in recent years and plans to continue focusing on strategic bolt-on deals. Company executives said debt reduction, organic investment and shareholder returns will remain priorities, while larger acquisitions are not currently viewed as necessary under its existing strategy.
Key Highlights
- Honeywell is looking to acquire $2 billion to $4 billion of companies.
- The company sees big M&A opportunities in its industrial automation business.
- In the past few years, Honeywell has invested $14 billion on 10 acquisitions.
- Management mentioned that vows of debt paydowns, organic investing and controlling returns to shareholders is still a high priority.
- For now though, it would seem an acquisition of Ralliant isn't in the cards given the company's preferred deal size.
Honeywell is aiming for acquisitions in the $2 billion to $4 billion range as it gives its industrial automation business room to grow but stays assertive on M&A discipline. Executives at the company on New York Investor day underlined growing opportunities in industrial automation and also reiterated its focus on strategic bite-sized deals.
Honeywell Sees Strong M&A Opportunities
This will be the main engine for growth,said Peter Lau, president of Honeywell's Industrial Automation unit. And given that the business sits atop a roughly $35 billion market, Lau says there is plenty of room for mergers and acquisitions.
For the group, Honeywell said it will pursue acquisitions in its ideal range of $2 billion to $4 billion. The new target tightens the last favored deal of $1 billion to $7 billion from the firm.
Focus Remains on Strategic Acquisitions
In recent years, Honeywell has spent about $14 billion on nearly 10 acquisitions as it refocuses and mainly pursues bolt-on deals between $1 billion and $2 billion. The company has folded those acquisitions together with divestitures and announced spin-offs as part of initiatives to streamline its operations.
Honeywell Chief Executive Officer Vimal Kapur said larger mergers and acquisitions are not off the table but would have to deliver for Honeywell which they don't think is part of their current strategy.
Debt Reduction Remains Main Goal
Speaking to investors, Honeywell Chief Financial Officer Mike Stepniak said the company remained focused on deleveraging, organic investments and shareholder returns also ahead of larger deals.
It also suggested a possible acquisition of Ralliant, a maker of sensors and precision instruments with a market capitalization of about $7 billion, was probably off the table for Honeywell given its preferred deal size.
Follow Inspirepreneur Magazine for more business news.