RFID Talk Blog

Making sense of the Honeywell-Intermec acquisition

Honeywell’s purchase of data collection pioneer Intermec closes the curtain on a company that was critical to RFID’s development, and opens the door for another, Honeywell, to make a strong impact in the RFID market.

The $603 million acquisition, expected to close in the second quarter, gives Honeywell access to Intermec customers in the transportation, logistics and manufacturing sectors. But Intermec’s 154 RFID patents could prove more valuable to Honeywell in the long run.

Honeywell to acquire Intermec

It's unclear if Honeywell will retain the Intermec brand name

“Intermec was historically the true full suite auto-ID supplier, and now that is Honeywell,” says Mike Liard, director of Auto-ID at VDC Research in Natick, Mass. “That’s what is interesting here. Honeywell continues its march to growth through acquisition.”

Honeywell emerged as the victor in a sweepstakes that included Italy-based Datalogix, which was in discussions earlier this year and was rumored to offer around $400 million.

Intermec’s treasure chest of intellectual property in its patent portfolio could prove invaluable for a company that knows how to use it. In 2006 Intermec unveiled its Rapid Start Licensing Program in order to provide licensing access to its RFID-related patents. Nineteen companies signed on to license Intermec IP at the time.

“That’s going to be one of the interesting parts to this deal,” says Liard. “Intermec has a solid position in the RFID space with the royalty and licensing program they introduced years ago. We don’t have good visibility yet into what Honeywell will do with that moving forward.”

The acquisition makes sense for both companies, and was something that many industry observers have anticipated for years. Intermec has struggled to capitalize on its extensive distribution channel and has been milking the cash cow of its bar code scanner business for years. Intermec, which had sales of $848 million in 2011, was not on a sound growth trajectory and cut 170 jobs from its global staff earlier this year.

By investing in both innovation and new distribution, Honeywell should maximize the value of Intermec’s IP and legacy business. Intermec will be rolled into Honeywell’s Scanning & Mobility division. It’s unclear if Honeywell will retain the Intermec brand name, although it could be a misstep to vaporize a brand with the rich history and name recognition that Intermec carries.

“The addition of Intermec is a natural extension to our Scanning & Mobility business, which was established through the successful acquisitions of Hand Held Products, Metrologic and EMS,” said Honeywell Automation and Control Solutions president and CEO Roger Fradin.

“While Intermec strengthens our core scanning and mobile computing business, it opens up entirely new opportunities in RFID, voice solutions and barcode and receipt printing segments that we currently don’t serve. It expands our product offerings and strengthens our intellectual property portfolio putting us in position to be a technology leader for years to come in the highly attractive automatic identification and data capture (AIDC) industry.”

While the acquisition is primarily a rescue of a struggling company, it is still another move toward consolidation in the fragmented RFID sector. Last December Smartrac unveiled its plan to purchase UPM’s RFID business. Industry analysts expect several major deals to be announced over the next 12 months.

“The Intermec acquisition points to a larger trend in the RFID and Auto-ID market,” says Patrick Sweeney, CEO and founder of ODIN and dwinQ, a firm that uses RFID in its social media solutions. “There are some amazing solutions in the marketplace. Significant R&D has been invested, and many solutions have proven their scalability beyond a shadow of a doubt.

“What has been lacking is sales, marketing and distribution investment. Companies with the muscle to maximize that investment through proven sales leadership will start to find technology companies with great solutions or defensible IP and go into acquisition mode to expand product line opportunities. I would predict at least three more big acquisitions in the next 12 months to consolidate the RFID market.”

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