Honeywell (NYSE:HON) International Inc announced on Friday that it would acquire the security business of air conditioner maker Carrier Global Corp for $4.95 billion in cash.
The security unit, which makes electronic locks for large corporations, owns brands such as LenelS2, Supra and Onity, which is used by many major hotel chains.
Carrier noted it will use proceeds from the transaction to pay down debt.
The deal will help boost Honeywell (NYSE:HON)'s building technologies business, which has been struggling with low revenue growth this year due to weak demand, Reuters reported.
It is also expected to be immediately accretive to Honeywell's cash-earnings per share in the first full year of ownership, contributing to growth, gross margins, and operating margins, according to the company.
"Strategically, this is a hand-in-glove acquisition for Honeywell. It was the most logical buyer and so this is not a surprise, although the multiple is certainly much higher as already noted," Wolfe Research analyst Nigel Coe said.
The acquisition is expected to close before the end of the third quarter of 2024.
Shares of Honeywell eased nearly 3% in premarket trading on Friday, while Carrier shares climbed about 5%.
Contact Sean at sean@proactiveinvestors.com