BWA BorgWarner Inc

Honeywell International Inc. (HON) is all set to expand its Automation and Control Solutions (ACS) and Aerospace businesses with its mutually agreed planned acquisition of EMS Technologies Inc. EMS Technologies is a leading provider of connectivity solutions for mobile networking, rugged mobile computers, and satellite communications.

The acquisition is valued at $33 per share in cash, or an aggregate purchase price of approximately $491 million, net of cash. The purchase price is equivalent to about 13 times EMS's 2010 earnings before interest, taxes, depreciation and amortization (EBITDA), or approximately 9 times 2010 EBITDA excluding certain corporate costs. As per the agreement, subsidiary of Honeywell will acquire all outstanding shares of EMS through a tender offer, which can be provided by the company within 10 business days.

The Global Resource Management (GRM) division of EMS, valued at $181 million, offer highly ruggedized mobile computing products and services for use in transportation, logistics, and workforce management areas and also for search and rescue operation by using secure satellite-based asset tracking and messaging technology. The satellite-based technique is also used in warehousing, and field force automation environments. EMS’s $174 million Aviation division is engaged in provision of terminals, antennas, in-cabin network devices, rugged data storage, and surveillance applications predominantly for use on aircraft and in other data gathering objectives. The addition of EMS expertise will help Honeywell in enhancing its potential in rugged mobile computing technologies and satellite communications.

Honeywell’s short-cycle businesses as well as its commercial aerospace spares and residential and commercial retrofit businesses are performing impressively well and are expected to support future growth outlook of the company. First-quarter 2011 was the eighth consecutive quarter in which orders in short-cycle businesses have increased. The company’s long-cycle backlog continued to be at near record levels.

The savings incurred from the implementation of Honeywell’s building techniques will be used for development without any need for outside funding. Further, the program will create job facilities for local contractors and housing authority residents.

Based in Morris Township, N.J., Honeywell International Inc. is a Fortune 100 company providing technical and manufacturing support to customers worldwide. It also provides aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Major competitors of Honeywell are BorgWarner Inc. (BWA), United Technologies Corp. (UTX) and Johnson Controls Inc. (JCI).

We currently maintain our Neutral rating on Honeywell, with a Zacks #2 Rank (Buy recommendation) over the next one-to-three months.

 
BORG WARNER INC (BWA): Free Stock Analysis Report
 
HONEYWELL INTL (HON): Free Stock Analysis Report
 
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
 
UTD TECHS CORP (UTX): Free Stock Analysis Report
 
Zacks Investment Research