Honeywell has announced the completion of its acquisition of Carrier Global Corporation’s Global Access Solutions business for $4.95 billion (£3.87bn).
According to the group, the deal positions Honeywell as a leading provider of security solutions for the digital age with opportunities for accelerated innovation in the fast-growing, cloud-based services and solutions space.
This transaction also strengthens Honeywell’s alignment of its portfolio around three compelling megatrends, including automation, and complements Honeywell’s Building Automation segment.
The acquisition brings differentiated software capabilities through the addition of three respected brands to Honeywell’s portfolio: LenelS2, a leader in commercial and enterprise access solutions; Onity, which offers electronic locks, specifically hospitality access and mobile credentials; and Supra, which specialises in cloud-based electronic lockboxes and scheduling software.
Global Access Solutions’ approximately 1,200 employees are now part of Honeywell. The transaction is expected to be adjusted earnings per share accretive in the first full year of ownership.
Global Access Solutions also enhances Honeywell’s Building Automation business model of leading with high-value products that are critical for buildings, the group says. It will also benefit from the business’s attractive growth and margin profile, valuable software content, and accretive mix of recurring revenue, with forecasted annual sales in excess of $1bn when combined with Honeywell’s existing security portfolio.
Vimal Kapur, Chief Executive Officer of Honeywell, commented: “As the world’s security needs evolve from a focus on protecting people to protecting both people and critical assets, we see strong growth prospects for our Access Solutions acquisition.
“By building on our strong track record of delivering high-value building automation products, solutions, and services globally, this acquisition creates an exciting opportunity for us to achieve faster growth and further margin expansion, while generating better outcomes for our Building Automation customers.”
Company Updates 2024 Outlook, Changes Non-GAAP Reporting Metrics
Beginning in the second quarter, Honeywell will exclude the impact of amortization expense for acquisition-related intangible assets and other acquisition-related costs4, including the related tax effects, from segment profit1 and adjusted earnings per share1. The company believes this change provides investors with a more meaningful measure of its performance period to period, aligns the measure to how management will evaluate performance internally, and makes it easier for investors to compare our performance to peers. Honeywell plans to provide historical non-GAAP financials under this new basis to facilitate comparability when the company reports its second quarter results in July 2024.
Full-year sales are now expected to be $38.5bn (£30.15bn) to $39.3bn (£30.78bn), including organic sales growth of 4% to 6%. Segment margin is expected to be in the range of 23.8% to 24.1%, with segment margin expansion2 of 30 to 60 basis points. Adjusted earnings per share is expected to be in the range of $10.15 (£7.83) to $10.45 (£8.18). Operating cash flow is expected to be in the range of $6.7bn (£5.24bn) to $7.1bn (£5.56), with free cash flow of $5.6bn (£4.38bn) to $6.0bn (£4.69bn).
Honeywell also updated its second-quarter sales, segment margin, and adjusted earnings per share guidance. Second-quarter sales are expected to be $9.3bn (£7.28bn) to $9.6bn (£7.51bn), with organic sales growth of 1% to 4%. Segment margin2 is expected to be 22.7% to 23.1%, down 40 basis points to flat compared to the prior year period. Adjusted earnings per share is expected to be in the range of $2.35 (£1.84) to $2.45 (£1.91), up 2% to 7% compared to the prior year.
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