Honeywell has agreed to acquire CAES Systems Holdings from private equity firm Advent International for about $1.9 billion in an all-cash transaction. This deal represents about 14 times the estimated 2024 EBITDA on a tax-adjusted basis.
This deal will enhance Honeywell’s defense technology solutions across land, sea, air, and space, including new electromagnetic defense solutions for end-to-end radio frequency (RF) signal management. And with CAES’ scalable offerings and Honeywell’s current defense and space portfolio, this combined company will grow Honeywell’s established production and upgrade positions on critical platforms that include F-35, EA-18G, AMRAAM, and GMLRS, while also launching offerings on new platforms like Navy Radar (SPY-6) and UAS and C-UAS technologies. With the current and anticipated demand, these programs are expected to continue growing in the years to come, creating favorable tailwinds for revenue growth of Honeywell’s Aerospace Technologies operations.
Based in Arlington, Va., CAES (formerly known as Cobham Advanced Electronic Solutions) has 13 facilities in North America, including highly automated manufacturing facilities with fully automated test and tuning processes. And the acquisition will add approximately 2,200 employees and a deep bench of RF engineering talent. Plus, Honeywell also sees attractive opportunities to expand the combined solutions internationally, capitalizing on accretive growth spaces with select defense customers.
This is Honeywell’s third acquisition this year as part of its disciplined capital deployment strategy. And the company is focused on high-return acquisitions that will drive future growth across its portfolio, which is aligned with the three compelling megatrends of automation, the future of aviation and energy transition.
The CAES deal, which is expected to be adjusted earnings per share1 accretive in the first full year of ownership, is not subject to any financing conditions and is expected to close in the second half of 2024, subject to customary closing conditions, including receipt of certain regulatory approvals.
KEY QUOTES:
“This acquisition further positions Honeywell at the forefront of the defense industry’s most dynamic sectors and sets the tempo for continued growth across our aerospace business. With the integration of CAES’ solutions and capabilities, we will fortify our existing defense offerings, while also expanding our capabilities in pivotal areas like RF, radar and sensing technologies, to ensure a market-leading position in areas that are critical for global security.”
- Vimal Kapur, Chairman and CEO of Honeywell
“The combination of our talented teams will diversify and deepen our expertise and specialized capabilities that enable us to scale current offerings and innovate new ones across critical military platforms. CAES’ trusted position with top U.S. defense customers strengthens our existing relationships as we shape the future of the defense industry together.”
- Honeywell Aerospace Technologies President and CEO Jim Currier
“As a trusted supplier and mission partner to our customers across advanced RF capabilities, I couldn’t be more excited to see CAES join the Honeywell team and work together to build on the outstanding expertise of both companies. Our extraordinary talent, RF breadth and world-class manufacturing facilities will offer new opportunities and further drive innovation for our industry.”
- Mike Kahn, President and CEO of CAES
“This transaction marks a significant milestone for both parties, and we are confident that the business will continue to thrive and grow. Under Advent International’s ownership, we have invested significantly in R&D, capital and capability enhancement, all of which has been pursued to drive growth and the development of cutting-edge capabilities. We believe this sale to a strong strategic home will secure its long-term future.”
- Shonnel Malani, Managing Partner at Advent International
