Aside from Siemens or Schneider, I can't think of the companies that would be interested in this.
Honeywell Trying to Sell Off Security Business
Published Feb 25, 2016 05:00 AM
The last several months have seen M&A activity in the security industry really picking up. Now Honeywell is getting in on the action by putting it's Building Solutions Business on the market. Contained within Building Solutions is a portion of Honeywell's security business.
Will Honeywell be able to join the multi-billion dollar M&A club, along with Tyco / JCI and ADT / Protection 1?
In this note, we break down Honeywell's financials, examine where the security business fits (or does not) and show what this means to the security industry.
WSJ ******* / ******* *******
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Comments (17)
Scott Gerrels
Feb 25, 2016Brian Karas
Feb 25, 2016I tend to agree with you. This isn't exactly a high growth or "cool" business unit.
UM
Undisclosed Manufacturer #1
Feb 26, 2016OK, it's said Hikvision has got financial support from China Banks for 3B$ ? and Honeywell security is listed at 3~4B$ ?
Just a joke.
U
Undisclosed #2
Feb 26, 2016Honeywell reports its global security business at $3 billion annual, making it noteworthy and the majority of this income apparently coming from ADI.
Are Honeywell products not sold through other channels besides ADI?
Brian Karas
Feb 26, 2016ADI is reported at $1.8B in sales, which makes it the majority of the $3B number cited.
As for the actual channel for Honeywell-branded products I couldn't get a solid answer on this, though I'm still trying to reach out to a few contacts.
You can certainly buy Honeywell products at places other than ADI, for example: HD31WH-Camera but I suspect that product originally made it into the world via ADI.
Mark Jones
Feb 26, 2016I tend to agree with you. This isn't exactly a high growth or "cool" business unit.
I would agree with the business perspective and behind this statement. I don't think Honeywell Corporate is worried about the cool factor. Business growth is absolutely on their minds and the minds of their shareholders. That does not mean that this is still not an interesting, rewarding or cool career choice, perhaps more or better suited for smaller companies, and small business in particular. I reference this article I read yesterday as just one reason I have stayed in this industry for 30 years while being offered other opportunities. Speaking only for myself, there is more to life than money.
Brian Karas
Feb 26, 2016Mark -
Thanks for the comments. When I say that business unit is not "cool", I don't mean that the security industry in general suffers from exciting or "cool" career options, but rather that this specific Honeywell business unit does not have any particularly compelling value outside of the raw numbers.
As Scott points out above, there are most likely not a lot of companies that would be interested in picking this up from Honeywell. It's not a *bad* business (even though the numbers show it's not *great* either), it's just the security equivalent of shopping for new tires.
These tend to be the kinds of deals where the buyer acquires the business in order to strip back some costs, maybe combine it with another business unit, and wring some extra sales out of it. It's not going to be valued and bought for hopeful huge growth potential and speculation, it's going to be bought for a very precise and calculated value.
JH
John Honovich
Feb 26, 2016"Speaking only for myself, there is more to life than money."
Guess you haven't spent much time with conglomerate executives ;)
Mark Jones
Feb 26, 2016JH
John Honovich
Feb 26, 2016In all seriousness, I do think the reason these conglomerate security divisions seems so dysfunctional is that the mindset is totally different than regular people. The conglomerate focus is maximizing short to mid term cash flow, so moves that seem destructive to customers and long term competitive positioned are viewed by them as value (i.e. profit) generating actions.
UI
Undisclosed Integrator #3
Feb 26, 2016I wonder if the UTC layoffs weren't due to the expected merger, or maybe they are going rep firm again? Maybe they can merge with an Edinburgh company and gain some Tyco/JCI type tax savings?
UI
Undisclosed Integrator #4
Feb 26, 2016Does this mean EBI might be going down the toilet where it belongs?
Scott Gerrels
Feb 27, 2016Wait, there are end users who still have EBI and haven't shot themselves yet?
CH
Chris Hammond
Feb 26, 2016Obviously ADI and video are a big part of Honeywell but the interesting thing to me is the mid to large access control business. Honeywell has for years been just dangling out there with ProWatch and WinPak. However, in the last 12 months I have a substantial number of clients either investing into the product by expanding it as their primary solution, or, are investigating it as one of the top three platforms. UTC seems to have alienated a lot of large end users and companies are asking for products that are not so proprietary. I don't know if this noise is translating to sales but I think there is a strong opportunity for Honeywell to strike by strengthening the sales engine. Otherwise, they should spin it or sell it in order to get out of its own way. Anyone else sensing similar trend of Honeywell access coming back in style?
Ryan Anderson
Mar 01, 2016Honeywell just acquired RSI Video (Videofied) this morning.
JH
John Honovich
Mar 01, 2016UM
Undisclosed Manufacturer #5
May 02, 2016My own opinion is a behemoth sized company that can't really compete with up and coming innovations because it can't move enough enough under it's own weight. So it is shedding a business to get what it can because margins thin out even further.
Don't misinterpret this as a strong criticism of Honeywell itself, but my own opinion of business physics from what I have seen when companies get to a certain size. We've done fairly well lately being the little company that could versus larger name competitors who just don't have that personnel level of interaction and service with their clients, or breadth of scope outside a basic cookie cutter solution.