US industrial group Honeywell International (NYSE:HON), which operates in the energy, automation, aerospace and chemicals industries, has purchased Elster, the German maker of gas, water and electricity meters, from Britain’s Melrose Industries for US$5.1 billion (GBP3 billion).
Elster, which is expected to generate US$1.8 billion in revenues for 2015, employs 6,800 employees in the United States, Germany, Great Britain and Slovakia.
The transaction is amicable, given that Melrose, which acquired Elster in August 2012, paid 1.8 billion pounds (about 2.8 billion US dollars), leaving the British company with a rather handsome profit in the transaction that will close in the first quarter of 2016.
"By investing heavily and improving operational performance, we created a lot of value for shareholders by more than doubling their investment in three years," noted in a statement the British company specializing in the purchase of industrial enterprises, processing and resale.
For Honeywell, Elster provides "both internal and external opportunities for growth," explained, the New Jersey based company’s CEO, Dave Cote.
Indeed, Honeywell is targeting complementary technologies to expand sales, and over the past decade it has acquired over 80 companies, thereby increasing its revenues by about $ 12 billion. This strategy has worked well and the company will continue to prospect for new acquisitions to contribute for growth according to Cote.
Elster’s utilities meters will serve as “a new platform for acquisition targets” said Cote, who is interested in growing also within the water and health care sectors, pursuing a US$10 billion acquisition goal by 2019 to exploit its cash buildup instead of offering buybacks and dividends.