On November 9, 2022, Chart Industries (Chart) signed a definitive agreement to acquire Howden from affiliates of KPS Capital Partners for US$4.4 billion. On March 13, Chart received all regulatory approvals required to close the acquisition. The purchase will be funded through a combination of cash and shares of a newly created class of preferred stock and is expected to close in the first half of 2023.
Howden is a global provider of mission critical air and gas handling products. Its portfolio includes compressors, rotary heat exchangers, steam turbines, and other air and gas handling products, services, and solutions.
Prior to the announced acquisition by Chart, Howden had been on a buying spree, racking up six acquisitions in 2021 including Compressor Products International, Spencer Turbine Co., Fancraft Ltd., Maintenance Partners NV, Peter Brotherhood, and Balcke-Dürr Rothemühle GmbH.
Howden’s product lineup expands Chart’s equipment portfolio and process technology offerings in hydrogen, carbon capture and storage (CCS), decarbonization of industries, water treatment, petrochemical, liquefied natural gas (LNG), air separation, and natural gas processing. Chart will benefit from integrating Howden’s compressors in its offerings where applicable, as compressors are the longest lead-time item in the current environment for hydrogen, helium, and small-scale LNG liquefaction.
Howden’s strong presence in regions such as Europe, the Middle East, Africa, and Southeast Asia, as well as applications in cement, marine, mining, and nuclear, will allow Chart to expand its customer base and projects portfolio. Chart’s exposure to LNG (particularly small-scale LNG which is applicable to Howden’s product offerings), water, and CCS will increase Howden’s opportunities in these markets.
Included in the sale are Howden’s 450 patents and patent applications across multiple jurisdictions worldwide and more than 800 trademark applications and registrations worldwide. Howden’s intellectual property and patent portfolio adds to Chart’s existing portfolio of 778 patents and patent applications and 569 trademark applications and registrations.
The combination of the two companies will produce a business with significant aftermarket, service, and repair exposure. Aftermarket, service, and repair comprise approximately 48% of Howden’s and approximately 14% of Chart’s revenue. Combined, this will be more than 30% of pro forma revenue with approximately 42% gross margin as a percent of sales. The addition of this high-margin aftermarket business will lift the combined margin profile, add resiliency, and reduce cyclicality.
