Honeywell buys warehouse automation vendor Intelligrated for $1.5B
Honeywell International Inc. (HON) said Friday it would acquire private equity-backed warehouse automation and logistics provider Intelligrated Inc. in a deal valued at $1.5 billion.
Mason, Ohio-based Intelligrated is a maker of supply chain and warehouse automation, software and services designed to improve productivity and reduce headcounts at warehouses. The company according to Honeywell is expected to generate $900 million in sales in 2016 from customers, including 30 of the top 50 U.S. retailers and half of the top 100 Internet retailers.
The company, founded in 2001, employs more than 3,100 people in manufacturing and regional offices located across the United States, Canada, Mexico, Brazil and China. Intelligrated is currently owned by a company backed by Permira Advisers LLC, which acquired it in 2012 from Gryphon Investors for $500 million.
Permira made about five times its original equity investment on the deal, according to a source familiar with the transaction.
Morris Plains, N.J.-based Honeywell said that the deal, which it expects to close in the third quarter, would boost its portfolio of supply chain automation products, and broaden its exposure to e-commerce platforms. Honeywell reportedly beat out Japan's Toyota Industries Corp. in an auction for the company.
"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, CEO of Honeywell's automation and control solutions business, said in a statement. "This acquisition fits with our vision for a connected industrial company and a connected worker."
Honeywell officials have expressed a strong desire to engage in M&A for some time now, but the company according to sources has repeatedly been turned off by the valuations sellers have demanded. The company did buy Elster Group GmbH, a maker of gas, electric and water meters, for $5.1 billion last year, but has expressed a desire to put its strong cash flow to work with other deals.
The company earlier this year made an unsuccessful $91 billion offer to acquire United Technologies Corp. (UTX).
It remains to be seen whether this transaction will be the last major milestone for Honeywell's Dave Cote, who announced earlier in the week he would be stepping down as CEO after 14 years on the job next March. Cote will be replaced by COO Darius Adamczyk.
Permira in a statement said that since acquiring Intelligrated in 2012 the company has increased its revenue by more than 90%, adding customers including UPS, Amazon and Walgreens in the process. Richard Carey, a Permira partner and co-head of the firm's Industrials team, called the investment "a prime example of our strategy to identify growth themes—here, the need for supply chain solutions to support the tremendous growth of e-commerce and home delivery—find the right companies and then work closely with management to bolster their market-leading positions."
Honeywell was advised by a Hogan Lovells US LLP team led by William Curtin. A Skadden, Arps, Slate, Meagher & Flom LLP team including partners Allison Schneirov, Jon Hlafter, Regina Olshan, Gavin White, Bruce Goldner, David Schwartz, Audrey Sokoloff and Frederic Depoortere advised Permira.