Blocked in an attempt at a record US$90 billion takeover, Honeywell International Inc is going back to its traditional pursuit of smaller deals with a US$1.5 billion purchase of warehouse automation company Intelligrated.
The acquisition will help Honeywell tap into fast growth for fulfillment centers spurred by online commerce, the company said in a statement on Friday.
Intelligrated, which belongs to a company backed by UK buyout firm Permira, is expected to generate sales of US$900 million for this year after increasing revenue by an annual average of 13 percent in the past three years, Honeywell said.
The maker of building systems, aerospace components and refinery equipment scrapped an offer for United Technologies Corp, after United Technologies rebuffed the proposal and customers including planemaker Airbus Group SE opposed it.
The Intelligrated deal “does fit in a little better historically with their mode of operation. They tend to do more deals in this size range than trying to do a mega-deal,” Edward Jones analyst Jeff Windau aid in a telephone interview. “The mega-deal is flashy, but sometimes draws a lot of questions.”
Intelligrated designs, manufactures and installs warehouse automation systems and fits with Honeywell’s scanning and mobility business, which makes hand-held computers used by warehouse operators.
“E-commerce continues to grow at an unprecedented rate and customer demands for faster delivery times have created a need for warehouse, logistics and fulfillment solutions that can increase productivity and lower costs for our customers,” Alex Ismail, chief of Honeywell’s automation and control solutions unit, said in the statement.
The price is 12 times Intelligrated’s annual earnings before interest, taxes, depreciation and amortization. Intelligrated, based in Mason, Ohio, employs more than 3,100 people and provides service to 30 of the top 50 retailers, Honeywell said.
The Intelligrated transaction is expected to close by the end of the third quarter.
Honeywell’s sales fell 4.3 percent last year to US$38.6 billion, dragged down by a drop in oil and gas investment. This year, Honeywell expects sales of as much as US$40.9 billion.
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