Honeywell to Buy Intermec, Unite Handheld Producers

This story appears in the Dec. 17 print edition of Transport Topics.

Honeywell International Inc. said it has agreed to purchase Intermec Inc. for about $600 million in a deal that would unite two of the transportation industry’s largest suppliers of rugged handheld computers.

The acquisition will nearly double the size of Honeywell’s scanning and mobility business to about $1.6 billion in annual sales, David Anderson, Honeywell’s chief financial officer, said on a Dec. 10 conference call.

“It really enables, now, Honeywell to be a leader of rugged mobile computers and scanners in the [automatic identification and data capture] space,” Anderson said.

If the deal is approved, Intermec will become part of Honeywell’s scanning and mobility segment within the Automation and Control Solutions division.

Roger Fradin, CEO of that division, described the addition of Intermec as “a natural extension” of a business that previously acquired Hand Held Products Inc. in 2007, Metrologic Instruments Inc. in 2008 and EMS Technologies Inc. in 2011.

Besides mobile computing products, Intermec provides other supply chain technology, such as radio-frequency identification tags and mobile printers.

“While Intermec strengthens our core scanning and mobile computing business, it opens up entirely new opportunities in RFID, voice solutions and bar code and receipt printing segments that we currently don’t serve,” Fradin said.

In the transportation industry, rugged handhelds are most commonly used in parcel delivery and less-than-truckload operations for communications, bar-code scanning and proof of delivery.

Honeywell is the supplier of UPS Inc.’s newest, fifth-generation handheld, which UPS refers to as its Delivery Information Acquisition Device, or DIAD.

In July, LTL carrier YRC Worldwide announced it would equip more than 10,000 of its city drivers with Intermec CN70e handhelds.

On the conference call, Anderson said that, given Honeywell’s existing scanning and mobility infrastructure, “we believe there are unique and, candidly, outsized synergy opportunities here.”

Under the terms of the agreement, Honeywell will acquire all outstanding common shares of Intermec for $10 a share in an all-cash transaction.

Honeywell, Morris Township, N.J., said it expects the transaction to close by the end of the second quarter of 2013, pending shareholder approval and regulatory reviews.

Intermec, Everett, Wash., has about 2,200 employees and operates more than 65 offices worldwide.

“We are pleased that Honeywell recognizes and values the capabilities as well as the strategic potential of our business,” said Allen Lauer, Intermec’s chairman and interim CEO. “The agreement with Honeywell not only maximizes value for our stockholders, it combines our history of innovation and engineering expertise, global reach and leading products and solutions with the significant global scale and resources of Honeywell.”

Intermec said it is suspending its previously announced search for a permanent CEO.

Consolidation has left Honeywell and Motorola Solutions Inc. as the largest competitors in the rugged handheld market for the transportation sector, said Christian Schenk, senior vice president of product strategy and market growth at XRS Corp. “Those two players are the big ones,” he said.

XRS provides in-cab fleet management applications that run on a variety of mobile devices, including rugged handhelds from Motorola, Honeywell and Intermec.

In October, Motorola Solutions announced it completed its acquisition of Psion PLC, a London-based supplier of rugged mobile computers, for $200 million.

That acquisition, followed last week by Honeywell’s agreement to purchase Intermec, is “a testament that consolidation in that space was inevitable, as it is in ours,” Schenk said.

“Honeywell is absolutely huge in Europe and Asia, and they’ve won some big business here in North America recently with some of the courier fleets,” he added. “They will be a force to be reckoned with.”

Analyst Ken Dulaney of Gartner Inc. agreed that the acquisition will leave Motorola Solutions and Honeywell as the “dominant players” in the rugged handheld space.

Dulaney said current Intermec customers “should have no worries” because the deal puts the company on better financial footing, “and the folks that build these products always have a long-term commitment to their customers.”

On its website, Intermec said it pioneered the use of handheld computers and on-route invoice printing for wholesale route distributors in 1979.

The company also said it invented the world’s most widely used bar code symbology, and has received more than 154 patents related to the development and use of RFID technology.

The company was founded in 1966 as Interface Mechanisms. It adopted the Intermec name in 1982.