Security

Honeywell Acquires Xtralis to Strengthen their Fire Detection Business

At the end of last week, Honeywell announced that they have agreed to acquire smoke detection and security company Xtralis for $480M. Although Xtralis is based in Ireland this deal is not motivated by the attraction to lower their tax bill through an inversion, as was the case last week in the announcement by Johnson Controls to acquire Tyco International, for upon completion of the acquisition, Xtralis previously known as Vision Fire and Security, will become part of Honeywell Security and Fire, a business unit of Honeywell Automation and Control Solutions. Nevertheless both of these deals involve companies that are at the leading edge of the world’s fire detection technology and together they will have a major impact on changing the competitive landscape. In our recently published Report on the Physical Security Industry we identified both Tyco and Xtralis in our list of the Top 50 potential acquisition targets. Honeywell was clearly in a strong […]

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At the end of last week, Honeywell announced that they have agreed to acquire smoke detection and security company Xtralis for $480M.

Although Xtralis is based in Ireland this deal is not motivated by the attraction to lower their tax bill through an inversion, as was the case last week in the announcement by Johnson Controls to acquire Tyco International, for upon completion of the acquisition, Xtralis previously known as Vision Fire and Security, will become part of Honeywell Security and Fire, a business unit of Honeywell Automation and Control Solutions.

Nevertheless both of these deals involve companies that are at the leading edge of the world’s fire detection technology and together they will have a major impact on changing the competitive landscape.

In our recently published Report on the Physical Security Industry we identified both Tyco and Xtralis in our list of the Top 50 potential acquisition targets. Honeywell was clearly in a strong position to offer enough for Xtralis and their private equity and director owners to let go of the company.

Xtralis pioneered the aspirating smoke detection product and for a significant time had no real competition and can now claim the honour of protecting the buildings and staff of many Fortune 500 companies, iconic sites and critical infrastructures worldwide.

The main building types that install these relatively expensive and sophisticated products include data centers, historical buildings, airports, industrial sites and manufacturing facilities; To provide very early warning and verification of threats. Other fire detection companies have products that compete with them including Honeywell but nothing like the heritage estate that Xtralis will give them.

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Alex Ismail, president and CEO of Honeywell Automation and Control Solutions says -“This acquisition fits perfectly with Honeywell’s technology innovation and leadership,” “Xtralis’ early smoke detection and advanced security technologies and video analytics software complement our growing Security and Fire business, and show our commitment to making the world safer and more secure.” We agree with him that this deal can make a big impact on their fire detection business and a solid contribution to their video security operations.

His predecessors in December 2004 pulled off a deal to buy Novar for $1.53 billion which included the top fire detection and building controls companies in Europe including Gent, Esser, MK, Trend Controls. They pulled this off against strong contenders including Siemens, Schneider Electric and General Electric.

This has helped to create possibly the world’s largest producer of fire detection products in the world and this this new deal will undoubtedly improve their competitive stance.

Apart from the price paid for Xtralis no other financial details were released but we believe that Xtralis had revenues of over $300 million so based on this Honeywell paid a revenue exit multiple of only 1.6. which does not seem over generous for a company with leading edge technology products. This of course is speculation.

For more information on the factors effecting M&A and the Competitive Landscape in Fire and Security, you can buy a copy of our recent report - The Physical Security Business 2015 to 2020; Access Control, Intruder Alarms & Video Surveillance.

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