Honeywell International Inc. said today it will acquire material handling automation provider Intelligrated Systems Inc. from its private equity owner for $1.5 billion, triggering a second wave of consolidation in the material-handling sector just two weeks after rival systems integrator Dematic Corp. was sold.
With the two largest U.S.-based material handling suppliers trading hands within a month, the changes show a rush by automation providers to stay ahead of fast-growing demand for e-commerce and home delivery.
Germany's Kion Group AG acquired Atlanta-based systems integrator Dematic Corp. for $2.1 billion on June 21, in a effort to extend its core businesses of forklifts beyond basic warehouse technology into the broader world of logistics systems integration.
Honeywell will fold Mason, Ohio-based Intelligrated into the Sensing and Productivity Solutions (S&PS) division of Honeywell's Automation and Control Solutions business. Chris Cole and Jim McCarthy, Intelligrated's co-founders, will continue to serve in leadership roles after the deal closes by the end of the third quarter, Intelligrated said in a statement.
Intelligrated's warehouse execution system (WES) software and order fulfillment technologies will complement Honeywell's product lines in mobile computers, scanning and auto-identification, and voice automation technology, the Morris Plains, N.J.-based industrial and technology giant said in its statement.
Honeywell earlier strengthened its position in those capabilities with its $600 million purchase of mobile computing and auto-ID provider Intermec Inc. in 2012. Honeywell leveraged that acquisition to bring its scanning equipment into the material handling market through Intermec's Vocollect division, which makes voice-directed picking systems.
Intelligrated had estimated 2016 sales of $900 million and 3,100 employees who provide automated warehouse distribution and fulfillment systems, software, and integration. By merging those supply chain automation tools with its existing products in mobile worker applications and data collection hardware, Honeywell hopes to strengthen its position in the market, it said.
"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, president and CEO of Honeywell Automation and Control Solutions, said in the statement. "This acquisition fits with our vision for a connected industrial company and a connected worker."
Demand for supply chain solutions will continue to evolve quickly in future years, under continued pressure by e-commerce growth on traditional fulfillment systems, parcel handling, and store-level productivity, said Permira, the London-based investment firm that owned Intelligrated before the sale. Intelligrated is well positioned to succeed in this sector because of its recent investments in an automated storage/retrieval system (AS/RS), a full parcel solution to compete in the high-growth global parcel market, and robotic platforms, according to Permira.
Given that technology platform and recent growth, Honeywell could use this strategic action to position itself as a much larger player in the integrated-supply chain solution space, said Jeff Smith, a supply chain management and analytics professor at Virginia Commonwealth University.
"From the Honeywell perspective, I think it is a smart move as it really expands their range of products in order to offer a more expansive solution set to their respective customers," Smith said.
Honeywell, Intelligrated, and Permira all declined comment beyond the statements.
Gartner, Inc.