(CTN News) – Honeywell, a U.S. industrial firm, announced on Friday that it will acquire Carrier’s security unit for $4.95 billion in cash.
This move is aimed at strengthening Honeywell’s building safety business, which has experienced a slowdown in growth recently.
Under the leadership of new CEO Vimal Kapur, this deal marks the largest acquisition. It will provide Honeywell with access to Carrier’s well-known brands, including Onity, a leading electronic lock maker used by major hotel chains, and Supra, a cloud-based lock maker.
Carrier’s Access Solutions security business offers a range of security systems for residential, commercial, and industrial purposes. Earlier this year, Carrier was considering spinning off its fire and security business, according to Reuters.
Analyst Nigel Coe from Wolfe Research commented that this acquisition aligns strategically with Honeywell’s goals and was the most logical choice for a buyer. While the price tag is higher than expected, it does not come as a surprise.
In early trading, the shares of Carrier, a Florida-based company, experienced a 4.3% increase, reaching $55.17. On the other hand, Honeywell saw a decline of approximately 1.4%.
This acquisition will greatly benefit the building technologies business, which has faced challenges in generating significant revenue growth this year due to weak demand.
However, Honeywell’s overall performance has been strong, primarily driven by impressive results in its aviation sector.
The all-cash deal with Carrier is expected to be finalized before the end of the third quarter of 2024. It is projected to contribute positively to Honeywell’s cash earnings per share in the first full year of ownership.
Carrier has announced its intention to utilize the estimated net proceeds of around $4 billion from the deal to reduce its debt. Last year, its fire and security unit accounted for approximately 17% of its total sales.