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Transaction
Case Studies

Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail bwalko@sokoloffco.com with your contact information.

Archives > Transaction Case Study 68

SOKOLOFF & COMPANY CASE STUDY
Honeywell International, Inc. (NYSE: HON)
acquires Intermec, Inc. (NYSE: IN)

DATE ANNOUNCED:  December 10, 2012
BUYER:  Honeywell International, Inc. (NYSE: HON)  
SELLER:  Intermec, Inc. (NYSE: IN)    
PURCHASE PRICE:  $10 per share, $603.4M total
FORM OF PURCHASE PRICE:  Cash

SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES


Year
2010 2011 Trailing Twelve Monthsthrough Sept 30, 2012

Revenue

$679.11M

$848.18M

$810.22M

Adjusted EBITDA

$29.0M

$60.0M

$62.0M

Cash

 

 

$85.94M

Debt

 

 

$83.86M

Purchase Price

 

 

$603.4M

Enterprise Value

 

 

$601.3M

Multiple of Revenue

 

 

.74

Multiple of EBITDA

 

 

9.7

TRANSACTION DRIVERS
Honeywell said the addition of Intermec will strengthen its core scanning and mobile computing business, while also opening up new opportunities in radio frequency identification, voice recognition and barcode and receipt printing markets that it currently doesn't serve.  

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.

SOKOLOFF COMMENTARY:
Good deal for HON and lucky break for long suffering IN shareholders.  Honeywell is buying a pretty good company for 10x EBITDA.  With integration synergies the multiple will drop to 5x.

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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