DC Velocity - July 2016

The consolidation trend that has become a familiar part of the transport and logistics segment has now moved inside the distribution center, with the country’s two largest material handling technology suppliers being acquired within a month’s time.

Honeywell International Inc. said July 1 it would pay $1.5 billion to acquire material handling automation solutions provider Intelligrated Systems Inc. from Permira, Intelligrated’s private equity owner. The move came just two weeks after rival systems integrator Dematic Corp. was acquired for $2.1 billion by Germany’s Kion Group AG, the world’s second-largest forklift manufacturer.

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, Intelligrated said. The transaction is expected to be completed by the end of the third quarter.

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 areas 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.

By merging supply chain automation tools with its existing products in mobile worker applications and data collection hardware, Honeywell hopes to further strengthen its position in the fast-growing market for e-commerce and business-to-consumer delivery, it said. “This acquisition fits with our vision for a connected industrial company and a connected worker,” Alex Ismail, president and CEO of Honeywell Automation and Control Solutions, said in a statement. 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, Permira added.

Honeywell is now situated to become a big 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,” Smith said.

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KION TAKES COMMAND OF END-TO-END FLOW

For Kion, the acquisition of Atlanta-based Dematic extends
its reach beyond forklifts and associated warehouse tech-
nology into the lucrative segments of warehouse automa-
tion and logistics systems integration. In adding Dematic’s
expertise in designing fully automated warehouses, Kion
said it plans to become a “one-stop supplier for intelligent
supply chain and automation solutions,” with a catalog of
products that “range from manually operated industrial
trucks to complete, fully automated warehouses.”
Kion said in its announcement that it acquired Dematic
also to position itself for the rapid growth of e-commerce
fulfillment and for “Industry 4.0”—a European term for
the application of the Internet of Things (Io T) to the indus-
trial and logistics sectors.

Acquiring Dematic will allow Kion to tap into these fast-growing areas just as third-party logistics service providers (3PLs) scramble to build capabilities in these segments, according to Clint Reiser, an analyst with consultancy ARC Advisory Group. “The market