Honeywell to buy security unit of Carrier for $4.95 billion

By Steve Gelsi

Carrier's stock gains on deal by conglomerate to beef up its building-automation business

Carrier Global Corp.'s stock was up by 4% Friday after it confirmed plans to sell its 1,200-employee security unit to Honeywell International Inc. for $4.95 billion.

Carrier (CARR) will use $4 billion of the sale proceeds to pay down debt.

Carrier now expects to resume stock buybacks when its leverage returns to about twice its annual earnings before interest, taxes, depreciation and amortization.

Carrier did not provide a specific timeline for the stock buybacks but said it plans to close the deal with Honeywell by the end of the third quarter of 2024.

Honeywell (HON) will add the Carrier business unit, which makes electronic locks for hotels and hospitals, to its building-automation unit as a way to strengthen its "alignment to the megatrend of automation, underpinned by digitization."

It's also a way for Honeywell to address a rise in demand for cloud-based products.

The Carrier security unit will add to Honeywell's growth, gross margins and cash earnings per share in the first full year, Honeywell said.

Evercore advised Honeywell on the deal, while Goldman Sachs and JPMorgan worked with Carrier.

Earlier, the Wall Street Journal reported the deal was under way.

Honeywell's stock fell by 1.6% on Friday. The stock is down 7.7% in 2023, compared with a 19.4% gain by the S&P 500 SPX.

Carrier, which manufactures air heating and cooling equipment, has seen its shares rise 33% in 2023, including Friday's gains.

-Steve Gelsi

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12-08-23 1211ET

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