[06-13-11] Honeywell<\/b> is in the process of acquiring wireless product developer EMS Technologies<\/b> for about $491 million in cash in an effort to expand its presence into the mobile and satellite communication industries.
\n The boards of directors of both companies entered into a contractual agreement that will see Honeywell commence a tender offer within 10 business days to purchase all of EMS\u2019s outstanding shares. The value of the transaction is expected to increase to about $506 million \u2014 representing a premium of 33 percent to EMS\u2019s June 10 closing price.
\n Honeywell hopes the move bolsters its global tracking tools and computing product lines, as an EMS pick-up would include its messaging and asset tracking technology for search and rescue, as well as EMS\u2019 aviation data storage, antennas and surveillance tools to gather data. EMS\u2019 LXE handheld devices and vehicle-mounted computers use satellite tracking to monitor cargo, assets and personnel. EMS\u2019 global tracking tools are being used by military personnel in Afghanistan to track assets via satellite.
\n Honeywell CEO Dave Cote said the deal would reduce his company\u2019s 2011 earnings by three cents to four cents a share, but would add to profit in the next fiscal year. \u201cHoneywell is uniquely positioned to acquire EMS due to the strategic fit across EMS\u2019s global resource management and aviation divisions,\u201d Cote said in a statement.
\n Bank of America \/ Merrill Lynch<\/b> advised EMS Technologies on the transaction, and King & Spalding and Kirkland & Ellis served as legal counsel. RBC Capital Markets<\/b> analyst Robert Stallard said that while some investors are concerned about EMS\u2019 selling price, the acquisition price did not surprise his firm. \u201cThis is not a cheap acquisition, which is perhaps what we should expect for high technology, electronics companies. Honeywell has ample financial capacity to bolt on companies like EMS, but we think investors may have concerns that Honeywell is paying a high price in deploying this surplus capital,\u201d Stallard said.
\n EMS Technologies, which offers connectivity solutions across a number of different segments, saw its space and defense business struggle in the early months of 2011. Its revenues from the space and defense part of its business generated a little more than $14 million in revenues compared with 2010\u2019s first quarter total of $16 million. EMS\u2019 operating profits from defense and space also fell by more than 50 percent year-over-year.
\n Richard Valera, a technology equity analyst at Needham & Company<\/b> said in a May research note that EMS\u2019 performance in the defense and space business did not reach its $17 million expectations.
\n \u201cThe defense and space backlog increased to $87 million from $73 million quarter-on-quarter, primarily due to a near-$20 million order for the Iridium<\/b> Next program,\u201d said Valera. \u201cWith EMS\u2019 Board having retained an advisor to explore strategic alternatives, we expect the shares to trade more on potential take-out valuation than near-term fundamental performance.\u201d
\n Reuters later reported that EMS put itself up for sale under pressure from MMI Investments \u2014 a 7.8 percent stakeholder in EMS. The report also said that EMS offered the MMI hedge fund an opportunity co-lead the sale process alongside its board of directors. Following the May announcement, EMS said it drew initial interest from a list of companies that included Comtech Telecommunications and that final bids for the company were due around June 9.<\/p>\n","protected":false},"excerpt":{"rendered":"
[06-13-11] Honeywell is in the process of acquiring wireless product developer EMS Technologies for about $491 million in cash in an effort to expand its presence into the mobile and satellite communication industries. The boards of directors of both companies entered into a contractual agreement that will see Honeywell commence a tender offer within […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-84706","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/84706"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=84706"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/84706\/revisions"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=84706"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=84706"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=84706"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}