By Dana Mattioli and Thomas Gryta
Honeywell International Inc. is pursuing an acquisition of water-filtration company Evoqua Water Technologies, which is laying the groundwork for an initial public offering, according to people familiar with the matter.
Evoqua, owned by private-equity firm AEA Investors LP, has been running a so-called dual-track process, simultaneously preparing for an IPO while running a takeover auction, the people said. Even though Evoqua filed publicly for the IPO this week, bidders including Honeywell remain interested in possibly buying the company, some of the people said.
Evoqua is worth around $3 billion, including debt, one of the people said. It is likely to become clear this month whether Evoqua goes public or is sold, this person said.
Evoqua helps municipalities and industrial customers with wastewater treatment. The company has a hand in treating more than 70% of U.S. municipal wastewater capacity, according to its website.
AEA purchased Siemens Water Technologies from Siemens AG for around $870 million in 2014 and changed the unit's name to Evoqua.
Honeywell, based in Morris Plains, N.J., is an industrial giant with a market capitalization of over $100 billion that makes an array of products including jet engines and rubber boots. It also provides building technology, industrial-automation products and water-processing systems.
A deal would be the first major move by Honeywell Chief Executive Darius Adamczyk, who took the reins in April. Shortly after he came into the job, activist investor Third Point LLC made a public push for Honeywell to spin off its aerospace unit. The company has been working with advisers on a review of its portfolio, the results of which are expected soon.
While Honeywell executives have indicated the company is likely to make moves to narrow its focus, Mr. Adamczyk has said he is open to acquisitions in the range of $3 billion or less.
"This is not just about subtraction, it's also about addition and we've been a very acquisitive company for a long time and we're going to continue to be that," he said in an interview last month.
In March, General Electric Co. agreed to sell its water business to France's Suez SA and one of Canada's largest pension funds for $3.4 billion. That divestiture was the sole condition from the Justice Department for approval of GE's combination with Baker Hughes Inc.
Write to Dana Mattioli at [email protected] and Thomas Gryta at [email protected]