Automation and Manufacturing Acquisition Activity Heats Up

GE continues to bolster its presence in various manufacturing, production and energy sectors with the proposed acquisition of the Well Support Division of John Wood Group PLC. Meanwhile, Siemens, no doubt watching is neighboring central European rival ABB picking up companies, has put out word that it is now in the acquisition hunt with a huge war chest.

GE Acquires Wood Group Division

GE announced that its Oil & Gas business has entered into an agreement to acquire the Well Support division of John Wood Group PLC (“Wood Group”) for approximately $2.8 billion. The transaction, which the Board of Wood Group intends to unanimously recommend to its shareholders, is expected to close later in 2011, subject to shareholders’ approval and customary closing conditions.

In 2010, the Well Support division recorded revenues of $947 million and EBITDA of $166 million (unaudited estimates), which reflected growth of 16% and 55% respectively over 2009. The division, which generated 13% average annual revenue growth over the past decade, is expected by GE to generate $1.1 billion in revenue and approximately $200 million of EBITDA in 2011. In addition, with synergies from GE Energy’s global scale and broad array of solutions, GE believes the business is well positioned for significant top and bottom line growth going forward.

John Krenicki, Vice Chairman and President and CEO of GE Energy added: “Enhanced oil recovery and unconventional hydrocarbon resource development are energy industry mega trends with huge growth potential. The Well Support Division and Wellstream acquisitions, when combined with Vetco Gray and Hydril, position GE to take full advantage of these trends. With the completion of these recent acquisitions, our drilling and production portfolio will be comprehensive and complete at scale to better serve our global customers and deliver double digit organic growth for our investors."

Siemens now in the hunt

Meanwhile according to this story in The Local, Siemens seems poised to enter the acquisition fray joining ABB and GE who have been hunting and pouncing for some time and Honeywell and Rockwell who have also been making strategic acquisitions.

“When we talk about larger acquisitions, we mean significant sums of up to several billion euros,” Chief Financial Officer Joe Kaeser said in an interview with the business daily.

He added that the company, Europe’s largest engineering group by sales, had reached a level of “management maturity” that enabled it to pursue significant takeovers.

The company will focus on an expansion of its power network segment as well as looking at new techniques for energy efficiency and automation. “This is where our focus will be – strategically and operationally, also in terms of takeovers and when it comes to research and development,” Kaeser said.

The new direction is a major shift from the company’s previous strategy, which was concentrated on restructuring, expanding margins and internal growth. It illustrates how companies in Europe and the United States are looking for ways to spend the cash they have accumulated since last year’s economic recovery.

The report said Siemens has about €15.6 billion in acquisition money to spend and a company source told the Financial Times Deutschland that its war chest was “filled to the brim.”

Another Automation Acquisition

Congratulations to Steve Rubin. He's been working to right Longwatch and get it a home. Now he's done both.

The announcement just hit my inbox. "Industrial Video and Control (IVC), a leading supplier of cameras and video systems for industrial, military, and commercial applications, announced the acquisition of Longwatch, a developer of video management software for industrial automation and process control applications.  IVC, based in Newton, MA, is known for its industrial camera systems that incorporate ruggedized cameras and state-of the-art video management software."

Longwatch’s Video Surveillance system, first introduced in 2005 to water treatment and power plants, is able to transmit video over existing instrumentation networks at speeds as low as 9600 baud. Longwatch has since established itself as the leader in integrating video with industrial SCADA applications. Its Video Historian automatically links video with various user databases (including data historians). Its most recent innovation is the Longwatch Console Recorder, which records industrial control console displays and enables easy playback for troubleshooting, operator training and regulatory compliance.

IVC will maintain the Longwatch brand and operate the company as a division of IVC. According to Norman Fast, CEO, the plan is to make both companies' product lines interactive while building on the Longwatch brand, leveraging its reputation for innovation in remote monitoring and process control. IVC's Relay Server, which interfaces with a multitude of cameras, will interface with Longwatch's Video Control Center – the software that drives the Longwatch Viewer, ActiveX controls for video integration, as well as the Video Historian. Longwatch's Video Engine, which provides "at the edge" recording of events and video, will also provide video streams to the IVC Relay Server.

IVC also plans to add support of its camera offering to the Longwatch environment. IVC manufactures and sells pan-tilt zoom, fixed, auto-zoom, and manual zoom cameras that incorporate the latest in imaging technology. Their industrial cameras are suitable for the harshest weather and environmental conditions; some models have been certified for use in Class I Division 1, Class I Division 2, and ATEX (inherently dangerous) environments.

Video Essay Up at Automation World

Here's a video essay on automation acquisitions, stumbles by manufacturing companies and opportunities for involvement. 

Automation and Power Acquisitions and Growth

Acquisitions in the automation space have hit early and often so far this year. ABB is continuing to fill out its portfolio in power distribution and smart grid areas. It's made so many moves in the past month, I can barely keep up. Adept Robotics surprisingly has entered the acquisition game expanding its food automation portfolio. The third acquisition bolsters a company in training for process operators. Then GE Intelligent Platforms acquired SmartSignal in what I regard as a surprise. GE investments that touch on my coverage area have been part of GE Energy. This is the first GE IP investment in quite some time.

I'm not surprised at all by the ABB acquisitions. They fill out a strategic direction that has been publicized. Adept has had corporate financial problems for quite some time. It's good to see that evidently the financial situation has stabilized and that it has money for an acquisition. It's also heartening to see GE invest in the automation arm.

In the first *ABB* acquisition, it announced it has agreed to acquire the business of Insert Key Solutions (IKS), a privately owned specialist software provider, adding IKS' solutions to its recently acquired Ventyx software portfolio. The move is said to create a comprehensive solution set for asset and work management, maintenance optimization, and equipment reliability.

Based in Chadds Ford, Pennsylvania, in the United States, IKS specializes in delivering software solutions for process improvement, increased equipment reliability and operational performance in power generation plants, and transmission and distribution networks. The company has an extensive customer base in the thermal and nuclear power sectors, and a staff of 50 people.

ABB plans to retain the IKS team and will place IKS executives in key roles within the Ventyx team responsible for Asset Suite, eSOMS (asset and operations management software), and IKS solutions.

The second acquisition is Obvient Strategies Inc., a privately owned specialist software provider, also adding Obvient's solutions to the Ventyx software portfolio. Obvient has offices near Atlanta, Georgia, in the US. The transaction is said to further enhance ABB's software offering for asset management, power distribution automation and smart grid applications.

Obvient offers software and services for industries and utilities with geographically dispersed assets. The company's business intelligence software collects, analyzes and reports critical real-time as well as periodic information. This supports decision making and helps users to optimize operations. As well as helping to manage complex operations, the solutions also reduce operating costs and improve asset reliability. Obvient's products compile the power transmission and distribution sector's best business practices into prepackaged solutions. This enables companies to monitor and manage their distributed assets more effectively, on a real-time and event-driven basis.

ABB plans to retain the Obvient team and place its executives in key roles within the Ventyx product management organization. The company has offices near Atlanta, Georgia, and a staff of 40.

Before I could post this, ABB announced another financial move, this time an investment.

It has invested $10 million in San Francisco-based ECOtality, a clean electric transportation and storage technologies company, to enter North America's electric vehicle (EV) charging market and provide ECOtality with a strong global ally in power delivery systems.

ECOtality will use the investment to foster its expansion and finance initial requirements of the EV Project, a program to develop electric vehicle infrastructures in 16 major US cities funded by a $115 million grant from the US Department of Energy (DOE). The project involves installation of more than 15,000 chargers to support the deployment of 8,300 electric vehicles.

In addition, the companies have signed an agreement establishing ABB as the preferred supplier for ECOtality's power electronics and component parts in North America. The companies will work together to develop charging technologies for electric vehicles that incorporate the advanced consumer interface and billing functionalities of ECOtality's Blink EV charging stations. Through its smart grids industry segment initiative, ABB will contribute its expertise from several projects in Europe involving integration of EV charging solutions.

*GE Intelligent Platforms* has completed the acquisition of SmartSignal, a privately-held, analytics software company based in Lisle, Illinois. SmartSignal specializes in providing Remote Monitoring & Diagnostics solutions to the Power Generation, Oil & Gas and other industrial sectors. SmartSignal is a leading provider of predictive diagnostic software and monitoring services used to anticipate, prevent, and avoid equipment failure. The company has more than 40 product and technology patents, and has won more than 25 awards for product excellence.

SmartSignal detects and identifies abnormal equipment behavior and provides exception-based notifications of developing problems along with diagnoses and prioritizations. Its solutions are device-agnostic and are found on equipment from GE, Siemens, Rolls Royce, Alstom, Flowserve, Waukesha, Byron Jackson, Cooper-Bessemer, and others.

*GSE Systems Inc.*, a global provider of real-time simulation and training solutions to the power, process, manufacturing and government sectors, announced the acquisition of EnVision Systems Inc., which provides interactive multi-media tutorials and simulation models, primarily to the petrochemical and oil & gas refining industries.

At closing, GSE paid $1.2 million in cash to the shareholders of EnVision. In addition, if EnVision attains certain revenue targets for the four-year period ending December 31, 2014, the shareholders of EnVision could receive up to an additional $3.05 million.

EnVision, with headquarters in Madison, NJ and an office in Chennai, India, was founded in 1991. EnVision's tutorials and simulation models serve the rapidly growing entry-level training market for the oil & gas refining and specialty chemicals industries. EnVision's products provide a foundation in process fundamentals and plant operations and interaction. With this knowledge base, users may then graduate to the full-scope, high-fidelity, real-time simulators provided by GSE. EnVision has completed more than 750 installations in over 28 countries and its approximately 130 clients include Shell Oil Company, BP, Total and Chevron. EnVision will operate as a wholly-owned subsidiary of GSE and be re-named GSE EnVision, Inc.

*Adept Technology Inc.*, a provider of intelligent vision-guided robotics and autonomous mobile solutions, announced that it has entered into an agreement to acquire privately held InMoTx, a provider of industry leading technology for the global food processing market. With operations based in Denmark, InMoTx is said to enhance Adept's position in the food packaging industry through a broad portfolio of intellectual property dedicated to inspecting, sorting, grading, and hygienically packaging unwrapped, natural products improving food safety by eliminating the risk of contamination introduced by manual handling.

Under the terms of the agreement, Adept will acquire InMotx in a cash and stock transaction valued at up to $4.3 million, which includes $1.5 million in cash, subject to adjustment, 200,000 shares of Adept common stock and earnout provisions based upon the revenues of the acquired business and related products over the three years following the acquisition. InMotx' founder and chief technology officer will be granted up to 100,000 shares of Adept common stock contingent on his continued employment with Adept for three years following the acquisition. The acquisition is subject to customary closing conditions and is expected to be completed by mid-January, 2011. The transaction is expected to be accretive in Adept's fiscal 2012 year.

And in other good news in the industry:

*Advantech*, an international supplier of industrial PCs and automation, adopted a board resolution to acquire 10,427 pings of Linkou Industrial Park at NT$145,000 per ping, or approximately NT$1.512 billion in total. The new park will be a fully functional campus and the second R&D and manufacturing headquarters of Advantech in Taiwan.

In light of the healthy growth and promising prospects for the IPC industry, Advantech is growing rapidly and doubling its revenues every five years. At the same time, production and warehousing facilities in Taiwan have faced space shortages and it is anticipated that the R&D office will also be out of space within the next five years. Therefore, Advantech plans to set up this second headquarters in Linkou. The new campus will become an important base for Advantech manufacturing and R&D over the next ten years and the location of the new park is expected to attract talent from Hsinchu and Taoyuan.

The campus park will be constructed systematically and in stages and include a factory, an R&D center, and an office building. The new campus will also provide a venue for an exchange of global talent and a training center. The long-term development plan includes four major elements, including a manufacturing and warehouse distribution center, an R&D building, stationed staff quarters / training center / convention center, and new business incubation centers.

GE Acquires Dresser

Automation junkies were speculating about a GE acquisition in the automation market--speculating on such companies as Rockwell. Well, the acquisition blockbuster was announced today, and it was not an automation company. It was Dresser Inc. for $3 billion. In our business, Dresser is perhaps best known through its Masoneilan valves division.

Dresser will be folded into the GE Energy business. GE Intelligent Platforms, the automation business, resides in the Enterprise Solutions business. I'm waiting on a comment from GEIP and will update if they have anything to say.

GE notes in its release, "The addition of Dresser’s portfolio, which includes technologies for gas engines, control and relief valves, measurement, regulation and control solutions for gas and fuel distribution, will expand GE’s core energy offerings and extend its reach into adjacent offerings for its energy and industrial customers around the world. The deal is subject to customary closing conditions and is expected to close promptly after receiving regulatory approval."

"Dresser is a great fit for the GE business model," said John Krenicki, vice chairman of GE and president and CEO of GE Energy. "Dresser's technology complements our existing gas engine portfolio and adds offerings complementary to those of GE in the $45 billion flow technology industry, including product offerings in the highly engineered valve segment. Eighty-five percent of Dresser's revenue is from energy customers, and it has developed a large installed base of equipment, which is a big reason why 40 percent of its total revenue is derived from aftermarket service offerings, and there is a lot of room for future expansion."

The release continues, "Dresser also will further the development of GE Energy's monitoring, diagnostics and performance optimization offerings. Dresser's pressure relief and control valve technologies will be complemented by GE’s domain expertise, which will create opportunities to bring additional technology and applications to Dresser's offerings. GE plans to build out solutions it offers to help customers effectively manage the pressure and relief flows in pipelines, processing plants and power generation facilities. Dresser’s capabilities combined with GE's existing solutions will help to increase customer productivity and reduce operational costs."

The deal announcement continues a series of actions in GE's energy business over the last 10 days. On September 27, GE announced a joint venture in China to grow in the world's largest wind market. On October 1, the company announced the close of the purchase of assets of Calnetix Power Solutions, which expands GE's capabilities to recover waste heat from industrial processes for electricity generation and will also complement GE's gas engine business. On October 4, GE signed a $700 million contract with Saudi Electricity Company for a new, high-efficiency power plant in Riyadh, Saudi Arabia.