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Honeywell Buys Ortloff to Enhance Technological Expertise

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Honeywell International Inc. (HON - Free Report) has acquired Ortloff Engineers, Ltd., for an undisclosed amount. The move is expected to strengthen the company’s gas processing technological capabilities, going forward. Honeywell’s share price rallied nearly 2% to $161.79 per share, as of Sep 5, since the buyout deal was closed on Aug 31. The company’s board of directors also recently announced the spin-off dividend of Garrett Motion Inc.’s (‘Garret’) shares.

Inside the Headlines

Ortloff Engineers will be a division of Honeywell UOP's Gas Processing and Hydrogen business. On grounds of the acquisition, Honeywell UOP intends to launch technologies that efficiently procure high-value natural gas liquids (NGLs) from the natural gas streams. Liquefied petroleum gas and NGLs have been in high demand, of late. These gases are used in the production of detergents, automotive products and plastics. Notably, per the U.S. Energy Information Administration, domestic demand for NGLs is currently increasing more than 10% on an annualized basis.

Honeywell UOP has been working with Ortloff Engineers since 2002. The combined technology offerings of the companies are presently installed in nearly 50 gas facilities across the globe. The end users are able to efficiently utilize natural gas resources with these state-of-the-art technologies.

Ortloff Engineers is a privately-owned developer and licensor of specialized gas processing technologies that boost returns in sulphur recovery and gas processing. Notably, the company’s non-imitable gas separation maximizing technologies assist in enhancing operational flexibility of plants and boosts returns over customers’ plant investments. Additionally, Ortloff Engineers owns technologies which have improved refinery lifecycle and eliminates sulphur from refinery feedstocks.

Honeywell UOP provides equipment and technologies that process, and treats natural gas and also purifies hydrogen used in petrochemicals as well as refining production. It is included in the company’s Performance Materials and Technologies business segment.

On the other hand, Honeywell anticipates closing the Garrett divestment by the end of third-quarter 2018. The company’s board of directors approved the payment of a dividend of $1.00 per share for Garrett shares. The pro rata dividend will be paid on Oct 1, to shareholders of record on Sep 18, 2018. The Garrett spin-off is in sync with Honeywell’s portfolio-transformation strategy. Each shareowner will receive one share of Garrett against 10 shares of common stock of Honeywell.

Over the past three months, Honeywell’s shares have rallied 6.4%, outperforming 0.6% growth registered by the industry it belongs to.

We believe increased technology spending in the global commercial aviation industry, along with sturdier demand for state-of-the-art technology solutions, stronger liquidity, greater operational excellence and lower corporate taxes will continue to drive profitability of this Zacks Rank #3 (Hold) stock in the near future.

Key Picks

Some better-ranked stocks in the same space are listed below:

Currently, Federal Signal Corporation (FSS - Free Report) sports a Zacks Rank of 1 (Strong Buy). The company pulled off an average positive earnings surprise of 22.48% over the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carlisle Companies Incorporated (CSL - Free Report) currently holds a Zacks Rank #2 (Buy). The company delivered an average positive earnings surprise of 12.85% over the trailing four quarters.

Crane Company (CR - Free Report) also carries a Zacks Rank of 2, at present. The company recorded an average positive earnings surprise of 3.03% during the same time frame.

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