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Honeywell (HON) to Acquire Carrier's Global Access Unit

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Honeywell International Inc. (HON - Free Report) has inked a deal to acquire Carrier Global Corporation’s (CARR - Free Report) Global Access Solutions business for an all-cash deal of $4.95 billion. The deal value is equivalent to 13x 2023E EBITDA (inclusive of tax benefits and run-rate cost synergies). This acquisition will boost HON’s building technologies business.

Florida-based Carrier is a provider of advanced heating, ventilation, refrigeration, air conditioning, fire, security and building automation technologies. Carrier’s core operational geographic regions include the United States, Europe, Asia-Pacific and other regions. Its Global Access Solutions business provides residential, commercial and industrial security systems.

With this acquisition, Honeywell will add three Access Solutions brands to its portfolio, namely, LenelS2 (which offers products like OnGuard and NetBox that are used by many Fortune 100 clients), Onity (provides electronic locks, including hospitality access, mobile credentials, and self-storage access) and Supra (its cloud-based electronic real estate lockboxes provides mobile credentials and access management).

Further, this move is strategic as it includes both hardware and software solutions to support the company’s plan to align its portfolio to three megatrends comprising automation, the future of aviation and energy transition, underpinned by robust digitalization capabilities and solutions. The Carrier unit’s acquisition also positions HON to become a leading provider of security solutions for the digital age.

Subject to regulatory approvals and customary closing conditions, the acquisition is expected to close by the end of the third quarter of 2024. The company expects the buyout to be cash-earnings per share accretive in the first full year of possession. Following the deal closure, the two companies will be able to advance innovation and provide cloud-based services and solutions to the customers.

Price Performance

In the past year, the HON stock has lost 9.3% compared with the industry’s 8.7% decrease.

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Zacks Rank & Stocks to Consider

Honeywell currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Conglomerates sector have been discussed below.

Federal Signal Corporation (FSS - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FSS delivered a trailing four-quarter average earnings surprise of 8.1%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2023 earnings has increased 3.3%. The stock has risen 55.2% in the past year.

General Electric Company (GE - Free Report) presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 8%.

The consensus estimate for General Electric’s 2023 earnings has increased 14.2% in the past 60 days. Shares of GE have jumped 44.9% in the past year.

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