Driving Growth: Honeywell to Buy CAES Systems for $1.9 Billion

Defence Industry

New Delhi: The US manufacturing giant Honeywell on June 21 said that it will buy aerospace and defence technology provider CAES Systems for $1.9 billion, as part of its focus on three broader business trends to drive growth.

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Chief Executive Vimal Kapur, since taking charge in June 2023 has steered the company toward three “compelling megatrends” – automation, the future of aviation and energy transition.

The all-cash transaction with private equity firm Advent International for CAES is Honeywell’s third deal this year. Advent completed its buyout of CAES (then Cobham Advanced Electronic Solutions) for $5 billion in January 2020 and later carved out CAES as a standalone entity in 2021.

CAES develops electronics such as antenna systems and communication networks for aerospace and defence companies, and the deal comes when orders have surged in response to drawn-out conflicts, including Russia-Ukraine and Israel-Hamas. The deal complements Honeywell’s offerings on programs such as Lockheed Martin’s  F-35, Boeing’s EA-18G, and missiles including Raytheon’s AMRAAM.

According to Honeywell, the deal will provide additional automated facilities and about 2,200 employees, many of them highly skilled engineers who could boost the aerospace operations. Expected to close in the second half of 2024, the CAES deal will add to Honeywell’s adjusted earnings per share in the first full year of ownership. With the CAES acquisition, the company has deployed just under $10 billion, or about 40% of the targeted amount set in 2023 for M&As and buybacks, halfway through the targeted timeline of three years.

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