Honeywell splashes out $1.81 billion on LNG business to boost energy transition offering

U.S.-based technology firm Honeywell has agreed to acquire the liquefied natural gas (LNG) process technology and equipment business from compatriot industrial gases supplier Air Products to be able to provide end-to-end services for global customers.

Thanks to the $1.81 billion all-cash transaction, expected to close by the year’s end, Honeywell will be able to offer customers what it deems to be a comprehensive, top-tier solution for managing their energy transformation journey. The new combination will entail natural gas pre-treatment and liquefaction, employing digital automation technologies unified under the firm’s Forge and Experion platforms.

“While the world continues to build the renewables-based energy infrastructure of the future, natural gas is a critical lower-emission and affordable transition fuel that will help meet ever-increasing and dynamic global energy demands,” said Vimal Kapur, Chairman and CEO of Honeywell.

“This highly complementary acquisition will further strengthen our energy transition portfolio, and Air Products’ CWHE technology will immediately expand our installed base – creating new opportunities to compound growth in aftermarket services and digitalization through our Honeywell Forge platform.”

The acquisition will bring together the tech player’s pre-treatment solution serving LNG customers globally and Air Products’ ability to provide in-house design and manufacturing of coil-wound heat exchangers (CWHE) and related equipment.

According to Honeywell, CWHEs provide the highest throughput of natural gas in a single exchanger, paired with a small footprint and robust, reliable, and safe operations both onshore and offshore. Air Products’ Pennsylvania-headquartered LNG business has around 475 employees and encompasses a 390,000-square-foot manufacturing facility in Port Manatee, Florida, where CWHEs are produced.

As stated in Deloitte’s ‘LNG industry trends report’, the LNG market has quadrupled over the past 20 years and is expected to double over the next two decades. Based on industry research, this is driven by demand in key end markets including power and data centers.

“The decision to divest our LNG heat exchanger technology and equipment business reflects Air Products’ continued focus on its two-pillar strategy — to grow our core industrial gas business and related technology and equipment, and to be a first-mover delivering clean hydrogen at scale to decarbonize industrial and heavy-duty transportation sectors,” underlined Seifi Ghasemi, Air Products’ Chairman, President, and Chief Executive Officer (CEO).

Described as Honeywall’s fourth acquisition in 2024, the transaction forms part of its strategy intended to drive future growth across its portfolio, in line with what the firm calls the three megatrends – automation, the future of aviation, and energy transition. While not subject to financing conditions, the transaction is subject to customary closing conditions, including obtaining certain regulatory approvals.

Ken West, President and CEO of Honeywell’s Energy and Sustainability Solutions (ESS) segment, noted: “The integration of this talented team and the acquired proprietary technologies will enable Honeywell UOP to bring a full spectrum of scalable solutions and services that help our global customers navigate the complex journey to more sustainable and efficient energy practices.” 

Air Products has had its hands full with hydrogen-related projects lately. Last month,  the firm inked a 15-year deal with TotalEnergies to deliver 70,000 tons of green hydrogen per year to the latter’s Northern European refineries starting in 2030.

The contract is envisaged to help TotalEnergiers reach its objective of reducing net greenhouse gas (GHG) emissions from its oil and gas operations.

The firm’s Canadian subsidiary hired Worley to provide procurement, fabrication and modularization services for the net-zero hydrogen energy complex being built in Canada, which is expected to produce clean hydrogen and capture and permanently sequester carbon dioxide (CO2) emissions.