Citi Says Honeywell's Business Sale Valuation is Relatively Lower
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 18 hours ago
0mins
After Honeywell (HON) announced that it has agreed to sell its Productivity Solutions and Services business to Brady Corporation (BRC) for $1.4B in an all-cash transaction, Citi said the sale multiple is "relatively lower than what we had previously expected," but it thinks the business is impacted by some cyclicality and a challenging operating environment, including higher memory pricing, leading to the "more muted valuation." However, the firm views the transaction as "a longer-term incremental positive" that should position the stand-alone automation business to generate higher profitability, added the analyst, who has a Buy rating and $265 price target on Honeywell shares.
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Analyst Views on HON
Wall Street analysts forecast HON stock price to rise
15 Analyst Rating
8 Buy
6 Hold
1 Sell
Moderate Buy
Current: 233.550
Low
195.00
Averages
235.07
High
262.00
Current: 233.550
Low
195.00
Averages
235.07
High
262.00
About HON
Honeywell International Inc. is an integrated operating company serving a range of industries and geographies around the world, with a portfolio that is underpinned by its Honeywell Accelerator operating system and Honeywell Forge platform. The Company provides actionable solutions for aerospace, building automation, industrial automation, process automation, and process technology. The Company supplies products, software, and services for aircrafts that it sells to original equipment manufacturers (OEM) and other customers in a variety of end markets. The Company’s portfolio of solutions and services is used in buildings worldwide for fire prevention, controls, access and security. Its offerings serve as the fundamental building blocks of industrial automation. Its sensor technologies and value-added smart edge devices offer connectivity across a variety of sensing and measurement applications. The Company offers a comprehensive portfolio of end-to-end process automation solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Technology Partnership: Honeywell will provide petrochemical processing technologies and catalysts to Nigeria's Dangote Petroleum Refinery, aiming to increase annual propylene production by 750,000 metric tons, enhancing local self-sufficiency in plastics and detergent ingredients while boosting Honeywell's competitive edge in emerging markets.
- Refining Capacity Expansion: Dangote plans to expand refining capacity from 650,000 barrels per day to 1.4 million barrels by 2028, positioning the facility among the world's largest refining complexes, which will further support Nigeria's industrial self-sufficiency.
- Growing Market Demand: This project highlights the ongoing demand for Honeywell's industrial process licensing and catalyst businesses, indicating Dangote's strategy to diversify revenue streams beyond fuel refining, aligning with the industrialization trends in West Africa.
- Largest LAB Facility: Dangote also plans to utilize Honeywell's technology to produce 400,000 metric tons of linear alkylbenzene (LAB) annually, with the facility expected to rank among the world's largest LAB production sites once fully operational, solidifying its position in the cleaning products market.
See More
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- Transaction Value: Honeywell has agreed to sell its productivity solutions and services unit to industrial equipment maker Brady for an all-cash deal worth $1.4 billion, aiming to streamline its sprawling business structure, with the transaction expected to close in the second half of 2026.
- Strategic Restructuring: Following the divestiture of its personal protective equipment business in 2024, Honeywell plans to split its operations into separate aerospace, automation, and advanced materials units, reflecting its ongoing focus on business optimization.
- Market Impact: The divested productivity solutions unit, which provides mobile computers, barcode scanners, and printing solutions for the warehouse and logistics market, is anticipated to contribute double-digit accretion to Brady's adjusted profit within the first year post-transaction.
- Industry Consolidation: Brady, which specializes in labels, signs, safety devices, and printing systems for industries such as electronics, manufacturing, and aerospace, will enhance its competitive position in relevant markets through this acquisition, further driving company growth.
See More
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- Business Sale Agreement: Honeywell has agreed to sell its Productivity Solutions and Services (PSS) business to Brady Corporation for $1.4 billion in cash, with the transaction expected to close in the second half of 2026, aimed at further simplifying the company's portfolio and enhancing focus on core operations.
- Strategic Transformation Progress: This sale is part of Honeywell's strategic review initiated in July 2025, marking a significant step towards completing its multi-year portfolio transformation ahead of the planned spin-off of its Aerospace business in Q3 2026, thereby accelerating value creation.
- Market Impact Analysis: With 2025 revenue of approximately $1.1 billion, PSS is a leading provider of mobile computing and barcode scanning solutions, and its divestiture will enhance Brady's capabilities in industrial identification and safety, expanding its service offerings in the warehouse and logistics sectors.
- Financial Advisory Support: Honeywell is being advised by Centerview Partners for this transaction, with legal support from firms such as Kirkland & Ellis LLP, ensuring the smooth execution of the deal while meeting regulatory requirements.
See More
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- Acquisition Overview: Brady Corporation is acquiring Honeywell's Productivity Solutions and Services business for $1.4 billion in cash, representing a transaction value of approximately 8x EBITDA for 2025, which is expected to significantly enhance the company's market share and profitability.
- Market Expansion Opportunity: This acquisition will position Brady to access the $9 billion productivity solutions market, leveraging PSS's strong customer base to better capitalize on long-term growth opportunities driven by automation and digitization trends.
- Financial Impact: PSS is anticipated to be double-digit accretive to Adjusted Diluted EPS within the first year post-transaction, while Brady aims to achieve at least $25 million in annual run-rate cost synergies within three years, further enhancing its earnings power.
- Strategic Synergies: The complementary product portfolio of PSS with Brady's printing and specialty adhesive materials will enable comprehensive solutions for large enterprise customers, increasing customer loyalty and facilitating cross-selling opportunities.
See More
