Honeywell International Expands Defense Portfolio with $1.9 Billion Acquisition of CAES Systems Holdings

Key Takeaways

• Honeywell International announced the $1.9 billion purchase of aerospace and defense contractor CAES Systems Holdings to enhance its defense technology offerings.
• The acquisition of CAES will boost Honeywell’s position in key defense sectors and is expected to be accretive to earnings per share in the first full year of ownership.
• The all-cash deal for CAES is set to close in the second half of this year.

Honeywell International (HON) shares surged on Thursday following the conglomerate’s announcement of acquiring aerospace and defense contractor CAES Systems Holdings from private equity firm Advent International for approximately $1.9 billion.

The all-cash deal is aimed at strengthening Honeywell’s defense technology solutions across various domains, including land, sea, air, and space. It will also enable the company to offer new electromagnetic defense solutions for end-to-end radio frequency (RF) signal management.

According to Honeywell, the addition of CAES will enhance its existing platforms and bolster its involvement in critical projects such as the F-35 fighter and the Navy’s SPY-6 radar system.

CAES Adds Potential for ‘Continued Growth’

CEO Vimal Kapur expressed optimism about the acquisition, stating that it positions Honeywell at the forefront of dynamic sectors within the defense industry and paves the way for sustained growth in its aerospace business.

CAES currently operates 13 facilities in North America and employs around 2,200 individuals. The transaction is anticipated to be finalized in the latter half of 2024 and is projected to have a positive impact on adjusted earnings per share in the first full year following the acquisition.

Following the announcement, Honeywell’s stock price rose by 0.9% to $214.73 as of 1:51 p.m. ET on Thursday, reaching its highest level in nearly 18 months.

This strategic move by Honeywell underscores its commitment to expanding its presence in the defense sector and leveraging the expertise of CAES to drive innovation and growth within its aerospace business.

Conclusion

The acquisition of CAES Systems Holdings represents a significant milestone for Honeywell International as it seeks to strengthen its defense technology offerings and solidify its position in key defense sectors. With a focus on enhancing its capabilities in areas such as electromagnetic defense solutions and radar systems, Honeywell is poised to capitalize on new opportunities in the evolving defense landscape.

As the transaction progresses towards completion in the second half of this year, investors are optimistic about the potential for growth and value creation that this acquisition brings to Honeywell. With a track record of innovation and a commitment to excellence, Honeywell is well-positioned to drive continued success in the defense industry.

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