Honeywell announced that it has signed a definitive agreement to acquire EMS Technologies, Inc., provider of connectivity solutions for mobile networking, rugged mobile computers, and satellite communications. The acquisition is valued at $33 per share in cash, or an aggregate purchase price of approximately $491 million, net of cash acquired. The purchase price translates to approximately 13 times EMS's 2010 earnings before interest, taxes, depreciation and amortization (EBITDA), or approximately 9 times 2010 EBITDA excluding certain corporate costs. The agreement provides for a subsidiary of Honeywell to commence a tender offer within 10 business days to purchase all outstanding shares of EMS.
The acquisition will enhance Honeywell's existing capabilities in rugged mobile computing technologies and satellite communications within its Automation and Control Solutions (ACS) and Aerospace businesses. EMS's $181 million Global Resource Management (GRM) division provides ruggedized mobile computing products and services for use in transportation, logistics, and workforce management settings as well as secure satellite-based asset tracking and messaging technology for search and rescue, warehousing, and field force automation environments. Through its $174 million Aviation division, EMS provides terminals, antennas, in-cabin network devices, rugged data storage, and surveillance applications predominantly for use on aircraft and in other data gathering objectives.
"EMS is a terrific addition to Honeywell, adding leading positions in attractive markets that are closely aligned with favorable trends in the growing Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) space and commercial aerospace, as well as being highly complementary to our existing Scanning and Mobility business," said Honeywell Chairman and Chief Executive Officer Dave Cote. “The acquisition brings engineering expertise, differentiated technologies, global reach, and profitable adjacent segments that build upon our great positions in good industries and enhance our growth profile."
EMS's GRM division offers solutions for supply chain logistics, mobile workforce management, and remote asset monitoring applications, supported by hundreds of partners worldwide. EMS's mobile resource management solutions include LXE-branded rugged handheld and vehicle-mounted computers featuring multiple radio technologies and satellite-based global tracking and monitoring solutions for cargo, fleet assets, and personnel.
Honeywell has been informed that all directors and officers of EMS intend to tender all of their respective shares in the Offer. The Offer will be subject to the tender of a majority of EMS's shares and customary closing conditions, including regulatory approvals. The transaction is expected to close in the third quarter of 2011. Although the transaction would be dilutive in 2011 by three to four cents, it is not expected to impact the company's previously announced 2011 earnings per share guidance range, and Honeywell anticipates it to be accretive in 2012.
