Honeywell International Inc. (HON) Chief Executive Officer Dave Cote said he’s seeking more acquisitions linked to natural gas after agreeing to pay $525 million for a stake in a U.S. maker of gas-processing equipment.
Natural gas is “not the only trend I’ll bet the company on, but I do believe it’s a trend worth bidding on,” Cote said today in an interview at a Honeywell research center in Dhahran, Saudi Arabia.
A boom in gas production from U.S. shale deposits and increased consumption abroad are driving sales at Honeywell’s UOP unit, which provides services such as filtering impurities from the fuel. Honeywell said Oct. 1 it was buying a 70 percent stake in Tulsa, Oklahoma-based Thomas Russell Co., which provides equipment to recover natural gas liquids in the U.S.
“We will keep making acquisitions in natural gas and invest in the UOP unit to develop natural gas technology,” Cote said. “I’m a big believer in natural gas and in what that can do for the U.S. economy and many economies around the world.”
Honeywell’s sales to the energy industry are tempering a drop at its transportation unit, setting up the Morris Township, New Jersey-based company to meet its 2012 revenue goal of $38 billion, Cote said. The company pared the top and bottom ends of its annual sales forecast on July 18 by $200 million, to a range of $37.8 billion to $38.4 billion.
The Performance Materials and Technologies unit, driven by UOP, posted a 14 percent sales gain in the first half, to $3.16 billion.
Honeywell has an option to purchase the rest of closely held Thomas Russell. Cote said he will sell Thomas Russell’s technology on a global basis in less than a year after the transaction closes. Honeywell said last week it expects the deal to be completed this quarter.
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