Honeywell has signed a definitive agreement to acquire the Elster Division of Melrose Industries plc for approximately $5.1 billion. Elster owns Elster Thermal Solutions, which includes industrial process heating brands such as Eclipse, Hauck, Kromschroder, Exothermics and CEC Combustion Safety. In total, the Elster Division of Melrose Industries provides thermal gas solutions for industrial, commercial and residential heating systems; gas, water and electricity meters, including smart meters; software and data analytics solutions; 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). The acquisition is anticipated to occur in the first quarter of 2016.
"This acquisition will allow us to improve customer value with technologies and lifecycle management solutions for industrial end users served by Honeywell's Environmental Combustion and Controls and Process Solutions businesses," said Dave Cote, chairman and CEO of Morristown, N.J.-based Honeywell. "Elster's gas business offers products in high demand among natural gas customers and brings a strong, global distribution network and numerous cross-selling opportunities for existing Honeywell technologies to new customers in both developed and High Growth Regions."
The agreement is subject to customary closing conditions, including regulatory review and Melrose shareowner vote. Melrose acquired Elster Group SE in 2012.
Honeywell previously acquired industrial combustion systems equipment maker Maxon Corp., Muncie, Ind., in 2008. Maxon, A Honeywell Company, continues to sell industrial burners and combustion systems.