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Honeywell Closes RAE Acquisition - Analyst Blog

By: Zacks.com
Posted: 6/6/2013 11:28:00 AM
Referenced Stocks: CMHHY;CODI;HLS;HON;ITT

Diversified technology company Honeywell International Inc. ( HON ) recently augmented its gas detection portfolio with the closure of the acquisition of RAE Systems Inc., a global manufacturer of fixed and portable gas and radiation detection systems, for $340 million. Post-acquisition, RAE will form an integral part of Honeywell Analytics, which is a division of Honeywell Life Safety (HLS) within Honeywell Automation and Control Solutions (ACS).

Headquartered in San Jose, CA, RAE offers rapidly deployable intelligent gas and radiation detection systems to facilitate real-time safety and security threat detection for various U.S. and non-U.S. government agencies as well as several city and state entities across the country. Its product portfolio includes a full line of wireless enabled solutions such as personal, hand-held, transportable, and fixed instruments for a wide range of personal and plant safety and regulation compliance applications.

With the merger, RAE aims to leverage Honeywell's expertise and financial capabilities to strengthen its continued efforts to develop and manufacture leading chemical, gas and radiation detection solutions and services for worldwide customers. The strategic decision further reflects its sustained focus on industrial and responder safety and is expected to fuel growth by redirecting capital to expand its research and development initiatives.

On the other hand, the acquisition has enabled Honeywell to offer a compelling value proposition to its customers with a comprehensive product portfolio, addressing all possible gas detection requirements in the industry. These include industrial fire and gas systems, portable gas detection, flame and centralized gas monitoring systems and systems used in commercial building environments. The transaction, therefore, is a win-win deal for both the participating companies.

Based in Morris Township, NJ, Honeywell manufactures a wide range of aerospace products and services, including control, sensing and security technologies for buildings, homes and industry; turbochargers; automotive products; specialty chemicals; electronic and advanced materials; process technology for refining and petrochemicals; and energy efficient products and solutions for homes and business.

Honeywell operates its business through four operating segments - Aerospace, Automation and Control Solutions, Performance Materials and Technologies, and Transportation Systems. Honeywell's diversified business portfolio mitigates operating risks and has the potential to earn consistent above-average returns.

Honeywell currently has a Zacks Rank #3 (Hold). Other companies in the industry worth mentioning include ITT Corporation ( ITT ) and Compass Diversified Holdings ( CODI ), both carrying a Zacks Rank #2 (Buy), and China Merchants Holdings (International) Company Limited ( CMHHY ), which retains a Zacks Rank #1 (Strong Buy).



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