The global logistics space continues hot with M&As and consolidations as increased online sales and demand for faster delivery times forecast 10 percent growth by 2019 for supply chain automation.
Honeywell, maker of building systems, aerospace components refinery equipment, and IT systems for supply chains, having recently been rebuffed with its $90 billion offer for United Technologies Corp., aimed smaller with its M&A bag of cash and snapped up privately held, Ohio-based Intelligrated, which manufactures, services and installs high-speed automated material handling equipment in customer distribution centers for the likes of UPS, Amazon, USPS, Nordstrom, and Walgreen.
“Industrial companies,” reports Bloomberg, “have turned to acquisitions to spur profit as a sluggish global economy has crimped sales growth. Honeywell’s sales fell 4.3 percent in 2015 to $38.6 billion, dragged down by a drop in oil and gas investment. This year, Honeywell expects sales of as much as $40.9 billion.
As such, logistics is a move toward growth. Intelligrated is expected to generate 2016 sales of $900 million after increasing revenue by an annual average of 13 percent in the last three years.
“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.
Honeywell competed against Toyota Industries for the acquisition.
Private equity firm Permira Advisers LLC acquired Intelligrated in 2012 for more than $500 million from Gryphon Investors, another private equity firm.
The Honeywell acquisition tab is $1.5 billion, which is 12 times Intelligrated’s annual earnings before interest, taxes, depreciation and amortization.
Honeywell shares rose 0.1 percent to $116.39 at 1:40 p.m. in New York while the Standard & Poor’s 500 Index posted a similar gain.
The transaction is expected to close by the end of the third quarter (2016)