Honeywell acquires RAE gas detectors

Honeywell has announced agreement to acquire RAE Systems, Inc, a privately held manufacturer of fixed and portable gas and radiation detection systems, and software – for $340 million. The purchase price translates to approximately thirteen times RAE Systems’ estimated 2013 earnings before interest, taxes, depreciation and amortization (EBITDA), or approximately six times on a synergy adjusted run-rate basis integrating with Honeywell’s gas portfolio. The agreement, subject to customary closing conditions, including regulatory review, is expected to close in the second quarter of 2013 and does not change Honeywell’s 2013 full-year guidance.

RAE Systems, with 2012 sales of approximately $107 million, offers a full line of personal, hand-held, transportable and fixed gas, radiation and photo-ionization sensing and detection devices for the government, oil and gas, industrial and emergency response sectors for use in a wide range of personal, plant safety and regulatory compliance applications. Their products are used in more than 120 countries by many of the world’s leading corporations and government agencies, as well as numerous city and state entities in the USA.

“RAE Systems is a pioneer in the gas detection industry with unrivalled technologies,” said Mark Levy, president and CEO of Honeywell Life Safety. “Their strong presence in hazardous material, first responder, and government complements our existing business very well, and their expertise in photo-ionization detection, wireless, and radiation detection represent terrific opportunities to expand our reach. RAE Systems’ geographic, manufacturing and distribution footprint, especially in high-growth countries like China, will help to make our already-strong gas detection portfolio an even greater global franchise in a very good industry. RAE Systems is a very compelling strategic fit for Honeywell.”

RAE Systems, founded in 1991 and based in San Jose, California, has approximately 750 employees and will be integrated into Honeywell Analytics, part of Honeywell Life Safety (HLS) within Honeywell Automation and Control Solutions (ACS).

This transaction builds on other successful acquisitions by Honeywell Life Safety including Zellweger Analytics in 2005, First Technology in 2006, the gas detection businesses of Sperian in 2010, and Fire Sentry in 2012. Honeywell Life Safety’s gas detection portfolio has technologies suited to address every type of gas detection requirement including industrial fire and gas systems, portable gas detection, flame and centralized gas monitoring systems and systems used in commercial building environments. Honeywell brings together nearly 200 collective years of expertise in the design, manufacture and technology of gas detection.

Invensys without the rail business

Invensys presented their “End of Year” results in a press conference this morning. Yes, financial results like you might expect, ie pretty much the same as last year, but what else came out of the presentation, describing their new business outlook? I present my impressions.

The change of emphasis was of interest. Invensys is now without the Rail business: no comment was made about the possible use of the Triconex type safety systems in railway systems, which I seem to remember was a feature last year.

The Group last year had three divisions, and a divisional structure. Mike Caliel came back to Invensys as a divisional ceo, in charge of IOM. Now the group, or the company called Invensys, has three lines of business, sorry, four lines of business, but there is no “Divisional” structure, because that produced divisional overheads. These overheads need to be seen to have been cut out. Mike Caliel is now absorbed into the Invensys HQ staff. What happened to Chris Lyden then?

Wayne Edmunds, ceo, says that everyone gets a facelift from this – although 500 divisional staff jobs will go, out of the 1000 staff reduction.

Four LOBs

The “Lines of Business” are Software, Industrial Automation, Energy Controls, and Appliances. Software is the apparent favoured segment, getting the acquisitions, investment, etc, because of 10% pa growth rate potential and mid 20% margin that should be achievable. This business is “quite unique”, apparently.

Industrial Automation (IA) has growth in single digits, with a margin in the high single digits, growing to low teens. How have the mighty fallen, was it just last year Wayne enthused about how hardware manufacturing produced the real value for any business?

Eurotherm

Maybe pensioned off into the single digit growth, mid teens margin segment of Energy Controls. But what is wrong with that, with the remote monitoring potential of IMServ, that was, some years ago maybe, developing from the basis of the original SCADA developments, and has good potential now with cloud monitoring and control.

Investments

Yes, there are opportunities for investment. Wayne is focused on the Software segment at the moment, with the example quoted of Spiral Software, and with GBP600m to invest, previously quoted to be planned as multiple GBP50m investments over several years. So he is recruiting an M+A expert, a veteran and a name in the M+A business. Why, when his managers already know their customer’s business, the one they are in? Let’s hope the new veteran understands software, but the role could just be that of a scapegoat, to be sacrificed, rather than Wayne, when the first acquisition goes wrong. A good job for a couple of years, I could try to do that.

In IA the intention is to invest in the existing portfolio, rather than acquisitions. So no new widgets. But an interesting comment from Wayne came out of a question from Barclays: “Mike and his team have been investing in a new line of DCS and safety systems with a far more flattering cost profile”, as part of a cost reduction effort on the present line. Cost reduction is an area for investment in IA.

Next steps

The next press interface is the capital markets day on June 5^th. Wayne suggested that Invensys had some ways to go in how they communicate with the market, presumably meaning analysts, and had the intention to strip away the complexity in their statements and make a much more straightforward interface. Maybe the market was expecting more, but it took a slight dip in the day of the 0900 presentation.

Management changes at ABB

ABB in Zurich has announced that their Chief Executive Officer, Joe Hogan, has decided to leave ABB for private reasons. A date for his departure has not yet been decided. Hogan will continue to lead ABB until a successor is announced, as he is committed to a smooth transition.

“Joe is a great and successful CEO and has done a remarkable job of leading the company through the deepest economic crisis in living memory. ABB today is in a much better position than it was when he joined five years ago,” said Chairman Hubertus von Grünberg. “I know this has been a tough and difficult decision for Joe and the Board sincerely regrets that Joe will be leaving the company.”

Hogan joined ABB as CEO in September 2008. During his time at the helm, ABB has invested about $20 billion to strengthen the company. Major investments have been made in acquisitions and in R&D to help secure ABB’s technological leadership in power and automation.

“Under Joe’s leadership ABB’s competitiveness has significantly improved by investing boldly in measures to drive growth and innovation, and by carefully managing costs,” von Grünberg added.

The comment from Joe Hogan was that “I have informed the board that I have decided to leave ABB. This has been a difficult decision as I leave behind a strong and talented Executive Committee and a cohesive Board whose support I could always count on. I look forward to making a smooth transition with as little disruption as possible to the positive momentum that ABB has established.”

Chief Technology Officer also resigns

Three days later in another press announcement ABB advised that their newly appointed Chief Technology Officer, Prith Banerjee, who joined ABB in 2012, has decided to leave ABB for family reasons. He will be relocating to the United States where he will be taking another position outside the company. Banerjee will leave in the next few weeks, and a successor will be announced in due course.

“Prith has brought new momentum to ABB’s research and development activity,” said CEO Joe Hogan. “I regret Prith’s decision to leave the company. I’d like to thank him for his contribution and wish him all the best for the future.”

PV Inverters from Schneider Electric

Schneider Electric, the global specialist in energy management, is honored to have been distinguished by GTM Research as one of the Top 3 most “Competitively Positioned PV Inverter Companies”, in their most recent research “The Global PV Inverter Landscape”.

“This is a great recognition of the positioning of Schneider Electric as a leading company in the solar power conversion market”, noted Laurent Bataille, SVP for the Solar Business of Schneider Electric. “This ranking of Schneider Electric as one of the leading specialized inverter manufacturers is a reflection of the changes at play in the solar industry. In the new phase of the solar market a few major criteria are now influencing customers’ decisions on their power conversion choices: bankability, global capabilities, competitive & reliable solutions”.

As the solar market goes through a rapid wave of bankruptcies and consolidations, the industry is increasingly concerned about securing the long-term future of installations. Suppliers that can provide that security bring an added value.  Peace of mind is key and not every solar PV company today can offer certainty that spare parts, service and technical support will be continually available over the 20+ year life of a solar installation.  Suppliers that combine long-term security along with reliable designs, efficient manufacturing processes and neatly integrated solution packages are especially valued.

Also critical in today’s global solar market is the ability to ramp up execution and field service capabilities in new geographies.  Comprehensive product offerings that cover the whole electrical and monitoring & control systems and can be deployed globally in a variety of different local environments are essential.  Schneider Electric’s localized PV box that comes with integrated power conversion substations, pre-qualified for all local standards and suitable for local environmental conditions is an especially welcome innovation.

“Schneider Electric is a uniquely bankable PV supplier, with proven global reach and infrastructure and best-in-class competitive and reliable solutions.  We’re excited to be part of the next wave of Solar and our recent project wins in Thailand, India, Canada, France and Japan demonstrate we’ve secured our position as one of the leading PV equipment suppliers”  says Mr. Bataille.

In times of rationalization and uncertainty in the solar industry, Schneider Electric is committed to invest in even better products and Mr. Bataille expects to unveil new product ranges in all segments throughout 2013 and 2014:

“We recently announced the launch of our new best-in-class inverters for the residential and commercial building markets in Grid-Tie or Off-Grid versions (respectively Conext RL, Conext TL in Grid-Tie and Conext SW and Conext XW in Off-Grid). In utility scale we completed our suite of plug and play equipment with a new range of array boxes, the Conext Control SCADA system and new PV boxes with Conext Core XC inverters offering efficiencies of up to 98.9%.”

Yokogawa ally with KBR over ammonia

Yokogawa Electric Corporation and KBR have signed a technology alliance for a fertilizer automation package (FAP) that will form part of the ammonia process technology solutions that KBR offers to its customers worldwide. Under the terms of this alliance, KBR will incorporate Yokogawa’s high value-added process control solutions in the FAP.

The fertilizer automation package will couple KBR’s ammonia process technology expertise with Yokogawa’s know-how of process control systems to streamline work processes, standardize configurations, and simplify product interfaces. Yokogawa will supply the CENTUM integrated production control system, the ProSafe-RS safety instrumented system, and selected solution-based software. KBR will provide know-how for the enhancement of the distributed control system (DCS) configuration and advanced applications used in operation management, performance monitoring, advanced process control, operator training, and dynamic simulation at fertilizer plants. It is expected that this package improve plant reliability, reduce energy, increase capacity and improve operator effectiveness in fertilizer plants. Further consolidation of these functions will reduce lifecycle costs for plant control, automation and management systems. Furthermore, it is believed that this alliance will provide measurable economic benefits and lead to improved process performance at fertilizer plants across the globe.

“This alliance is consistent with KBR Technology’s growth strategy for our fertilizer business,” said John Derbyshire, President, KBR Technology. “We are very proud that Yokogawa has agreed to partner with KBR and we look forward to pursuing opportunities to apply the fertilizer package both in our new and numerous existing facilities worldwide.”

“Through our alliance with KBR, Yokogawa is demonstrating its long-term commitment to providing high quality and innovative technology to the ammonia and fertilizer industry,” said Satoru Kurosu, President, Yokogawa Electric International.