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Archives > Transaction Case Study 68
SOKOLOFF & COMPANY CASE STUDY:
DATE ANNOUNCED: December 10, 2012
SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES
The purchase price translates to approximately ten times Intermec's trailing 12 months (TTM) earnings before interest, taxes, depreciation and amortization (EBITDA) as of September 30, 2012, excluding certain corporate and public company costs, or approximately five times on a synergy adjusted run-rate basis. The transaction is expected to close by the end of the second quarter of 2013 pending Intermec shareholder approval and following customary regulatory reviews.
Reminded of the old saying that a broken mirror equals seven years of bad luck, we guess that someone at Intermec must have dropped a mirror in 2006. In January of that year, IN stock was trading at $35. Since then, 2006 IN has dropped 70% while the DOW moved up more than 30%. Yet IN has not been a bad top-line performer. Revenues have generally increased, including each of the last three years (2009-2011). The problem seemed to be that company management could never meet the earnings challenge, consistently producing negative earnings every year.
The three-pronged challenge to HON is to implement strong leadership, put the Honeywell brand on IN’s products and integrate sales channels.
Fortunately Honeywell has the right man for the job. Roger Fradin is President and CEO of Honeywell's Automation and Control Solutions, the unit which will absorb Intermec. Roger took the job in 2004 following a very successful stint as President and CEO of Security and Fire Solutions. Starting in the business in 1976, Roger helped lead the entrepreneurial team that built Pittway into the world’s leading supplier of electronic security and fire alarm products at the time HON bought it in 2000.
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