Elster acquired by Honeywell

Honeywell acquired the Elster division of Melrose Industries in a carve-out announced on 28 July 2015 and completed on 29 December, ahead of the first quarter of 2016 originally expected. The transaction carried an enterprise value of $5.1bn, an EV/EBITDA multiple of 10x–18x on estimated 2015 EBITDA, on sales of $1.8bn. Completion followed approval by Melrose shareholders and regulatory clearances in the United States, the European Union and China. Elster makes two sets of products. The first covers the components that control gas in heating systems: regulators, valves, burners and safety devices fitted inside domestic boilers, commercial installations and industrial furnaces, where they govern the flow and prevent accidents. The second covers the meters utilities install to measure what their customers consume in gas, water and electricity, including the smart meters that transmit readings remotely, along with the software that collects and analyses the data they send. It also supplies flow computers and regulators for the gas industry itself, used in transmission and distribution networks. The business employed around 6,800 people, with its main sites in the United States, Germany, the United Kingdom and Slovakia, and had deployed more than 200 million metering modules over the preceding decade. That installed base matters: meters are replaced on regulated cycles, and the incumbent supplier is well placed to win the replacement. For Honeywell, the purchase added metering as an adjacency to its existing controls business, and gave it positions in regions where it was seeking growth. The gas heating and metering activities were folded into its Environmental & Energy Solutions business, while the upstream and midstream gas applications went to Honeywell Process Solutions.