By now, the Intelligrated story is familiar to those of us who follow the industry: Fifteen years ago, in the aftermath of 9/11, Chris Cole and Jim McCarthy launched a new systems integration and manufacturing firm at a time when many may have wondered why the materials handling world needed another conveyor and sortation manufacturer.
Fast forward, and Cole and McCarthy built Intelligrated into a market leader, especially in North America, with approximately $760 million in sales in 2015 (ranked #8 on Modern’s list of the Top 20 systems integrators worldwide). Now, they have successfully sold the firm they founded to Honeywell for a reported $1.5 billion, in a deal that closed at the end of August.
Last week, I had a chance to talk to Cole, who is now chairman and general manager of Intelligrated, and Brian Hovey, vice president and chief marketing officer for Honeywell Safety and Productivity Solutions, about the acquisition and their vision for Intelligrated and Honeywell going forward.
Why now: When the company was founded, Cole says that he and McCarthy had a vision of making sure that Intelligrated’s customers succeed and a culture that valued taking care of its people and acting with integrity with its suppliers. As the company grew, so did the vision and the need for capital to expand. What that meant, says Cole, was going to the financial markets every three to five years to recapitalize the company.
“Jim and I are at the relative end of our careers, and we wanted to find a home where we could accelerate our vision and maybe make some acquisitions, without having to refinance every three to five years,” Cole says.
The time is also right for the industry to take big strides, he adds. “We are on the cusp of supply chain execution being a huge part of the economy as connectivity becomes more important.”
What Honeywell brought to the table: There were several suitors, according to Cole. Honeywell was an American-based multi-national with a global reach and a similar approach to Cole and McCarthy. “We felt they shared a passion to get into this space and grow it,” Cole says. “I also saw more similarities in their technical vision than others in the space.”
What Intelligrated brings to Honeywell: Honeywell has a long history in manufacturing automation and sensing devices and in recent years has made significant investments in automatic data capture, including its 2012 acquisition of Intermec for $600 million. Today, it is the number 2 player in that space behind Zebra. That deal not only built on Honeywell’s portfolio of scanning devices, but brought voice into the mix. Transitioning into automated materials handling systems was a natural next step, according to Hovey.
“A key guiding point for us is that this is a business that has been growing extremely fast and the conditions are ripe for continuing or accelerating that growth rate. We recognize that materials handling automation is a space with great opportunities, so we want to leverage the expertise within the Intelligrated team to shape our direction.”
Honeywell’s approach, he adds, is to keep the leadership structure and processes in place while providing the resources and opportunities to enable the business to grow. For the foreseeable future, Intelligrated will continue to operate under its own name as a part of Honeywell. “Intelligrated has built a strong brand and we don’t want to do anything that impacts that.”
Staying visible: There have been some rocky acquisitions within our industry. 3M never quite figured out what to do with HighJump, which was spun back out as a privately-held company, and by all reports from the analyst community, JDA initially struggled with its acquisition of RedPrairie.
Hovey argues that Honeywell is committed to the space and has “a track record of bringing in and integrating leaders from different businesses into the Honeywell fold.” While many things are speculative at this point, that could very well be the case for Cole. “Jim continues as president and I’m now the chairman and general manager, which doesn’t change what we do on a daily basis,” Cole says.
“My plan is to stay a couple of years and ensure that the growth of Intelligrated continues. I feel that we have the next generation of leadership in place and at some point they’ll be ready to take on this business.”
Looking forward: Both Hovey and Cole are realistic about global challenges outside of their control, but both also believe “the underlying trends are in favor of this industry,” as Cole says. “I’m an optimist. I see a fantastic future for the industry and think it’s a great place for young people.” Adds Hovey: “We’re looking to the future. Our vision is to continue down this path and to make the right types of investments to deliver on this mission of enabling our customers with enhanced productivity solutions.”
Related: Honeywell Beats Toyota Industries for Warehouse Automation Company Intelligrated 
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