Honeywell has announced that it has signed an agreement to acquire the Elster Division of Melrose Industries plc, a provider of thermal gas solutions for commercial, industrial, and residential heating systems and gas, water and electricity meters, including smart meters and software and data analytics solutions, for approximately US$5.1 billion. Elster is also a manufacturer of flow computers and regulators for the gas industry. Elster consensus sales for this year are estimated to be US$1.8 billion. The price translates to approximately 12.6 times Elster’s estimated 2015 consensus earnings before interest, taxes, depreciation and amortisation (EBITDA), and the acquisition is anticipated to occur in the first quarter of next year. The agreement is subject to customary closing conditions, including regulatory review and Melrose shareowner vote.
Dave Cote, Honeywell Chairman and CEO said, “the acquisition of Elster will generate strong future returns for Honeywell’s shareowners because it increases our growth profile globally, creating both organic and inorganic growth opportunities, and because Honeywell can run this company effectively and accelerate its growth through our complementary technologies, software knowledge, and presence in high growth regions. Elster has outstanding technologies, brands, energy efficiency know how, and global presence, all of which we are very well positioned to build on. Elster also creates a new platform for acquisition targets for Honeywell that will be additive to the business’ growth and global presence. We will see immediate benefits to Honeywell’s portfolio, accelerating into 2016 and 2017. This is a great acquisition for Honeywell and our shareowners.”
Elster employs approximately 6800 people with major locations in the US, Germany, the UK and Slovakia. The company maintains an impressive installed base with over 200 million metering modules deployed over the course of the last 10 years alone.
Edited from press release by Claira Lloyd
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