Honeywell will pay $5.1 billion to acquire the Elster Division of Melrose Industries plc, which provides 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.
Elster also manufactures flow computers and regulators for the gas industry. Elster consensus sales for 2015 will be $1.8 billion. The price translates to approximately 12.6 times Elster’s estimated 2015 consensus earnings.
The acquisition should close in the first quarter of 2016.
“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 Chief Executive 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.”
“During the past decade, we have completed more than 80 acquisitions adding approximately $12 billion in revenues,” Cote said. “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.”
Elster employs 6,800 people with major locations in the United States, Germany, the United Kingdom, and Slovakia. The company’s installed base has over 200 million metering modules deployed over the course of the last 10 years.