Honeywell to acquire Elster

Elster also manufactures flow computers and regulators for the gas industry. Elster consensus sales for 2015 are estimated to be $1.8 billion. The price translates to approximately 12.6 times Elster’s estimated 2015 consensus earnings before interest, taxes, depreciation, and amortization (EBITDA), and the acquisition is anticipated to occur in the first quarter of 2016.

The agreement is subject to customary closing conditions, including regulatory review and Melrose shareowner vote.

“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,” said Honeywell chairman and CEO Dave Cote.

“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. This is a great acquisition for Honeywell and our shareowners,” Cote added.

Cote also said that the Elster acquisition had proven they are staying true to their disciplined M&A approach and integration processes.

Accordingly, during the past decade, the company has completed more than 80 acquisitions adding approximately $12 billion in revenues.

“We will continue to look for good acquisitions to enhance our growth profile. We see Elster as a great opportunity to deploy our operating model and key process initiatives to grow the business, enhance our position globally, and drive significant returns to shareowners over the long-term,” Cote noted.

Elster employs approximately 6,800 people with major locations in the US, Germany, the United Kingdom, and Slovakia. The company maintains an impressive installed base with more than 200 million metering modules deployed over the course of the last 10 years alone.

There is no change to the 2015 full year guidance Honeywell provided in its second quarter earnings release. Honeywell expects that the dilutive impact of the transaction on its 2016 earnings per share (EPS) to be minor.