Industry news: Honeywell acquires Enraf to build offerings in oil & gas industry

-- Control Engineering, 7/6/2007

Another trans-Atlantic process industry merger is in the works with Honeywell’s agreement to purchase Enraf Holdings B.V. for $260 million. Enraf is based in Delft, Netherlands, and has six groups all centering on instrumentation and control products for oil and gas producers and transporters. In 2006, the group had worldwide sales totaling $130 million.

Once the merger is finalized, Enraf will be part of Honeywell Process Solutions (HPS) and extend its coverage of the global oil and gas industry. “Enraf has a proven track record of growth both organically and through strategic acquisitions,” says Jack Bolick, HPS president. “We are confident the synergies resulting from this transaction will deliver similar results in HPS. We don’t justify our acquisitions on sales synergies, we do it on cost synergies, and we can make this accretive in 2008 just on cost. But we also have the possibility of doubling their business over the coming years by helping them with channels and economies of scale”

HPS EMEA president Paul Orzeske said the move would greatly expand Honeywell’s global portfolio in high-growth, high-service industries, especially the oil and gas industries. He said negotiations to acquire Enraf began about six months ago and that he had been personally involved in the deal for the last three months. The Enraf headquarters are about a two hour drive from Honeywell’s main European office in Brussels.

Orzeske said that as part of HPS, Enraf will provide a more comprehensive automation solution in energy production, processing, transport, storage, and product distribution. This will be especially important for the rapidly expanding areas of LNG handling and distribution in Korea, Qatar, and Norway. The two companies have worked together on automation solutions for a number of years, he said, and all of Enraf’s sales, service, and distribution teams will remain in place but be evaluated by Honeywell in the context of its much larger global organization. “Our service organization generally does not work on third party equipment,” he said, “but we are going to integrate servicing Enraf products as quickly as possible.”

There are six groups within Enraf. The core group is Enraf Terminal Automation which provides precision measurement systems and software for tank storage companies and has about 230 employees. Most of the other five groups were acquired recently to expand the services and solutions role of the parent company. Each has about 40 to 50 employees: 

• Enraf Calibron Systems (small volume provers and liquid density meters, acquired in 2006);
• Enraf Contrec (fuel management systems used by the petrochemical industry at bulk tank storage sites, based in Australia and acquired in 2002);
• Enraf Fluid Technology (custom-engineered explosion-proof precision blending and additive metering equipment, acquired in 2005 from Lubrizol);
• Enraf Marine Systems (level measurement systems for marine applications, acquired in 2003); and
• Enraf Tanksystem (mobile precision level measurement systems used on board ships, acquired in 2005).

Bolick commented that this move operates hand-in-hand with HPS’s agreement to resell Krohne flowmeters, with Enraf now adding level and metering instrumentation. This supplements fire and gas detectors, plant security systems, and other compliance equipment already available. “The common thread here across all these is not only our DCS and control platforms, and safety shutdown platforms, but a wireless platform too,” Bolick added. He anticipates all these will ultimately be tied together, with the OneWireless system providing integrated communication.

Enraf’s portfolio includes servo gauges, radar devices, and other level measurement instruments for tank storage, but they are “highly differentiated” in their degree of precision and areas of application, Orzeske said. One specialty product, the LDT (level, density, and temperature) device is capable of measuring the linear height of oil in a tank and detecting stratified layers.

Honeywell will continue to look for acquisitions, said Orzeske, but only for “highly differentiated” sensors that can extend the Experion product range. “We are not interested in commodity sensor products. We are interested in extensions to our own product line. This is a beginning of a shift for HPS. We are getting more involved in acquisitions.”

Bolick expanded on that idea, commenting, “Our strategy will be to continue to look at things in the field that turn data to knowledge to decision, and use our advanced solutions on the opposite side to filter that data so the right piece of data turns to knowledge for the right person. That might be the operator or executive or whoever it is, but they will be able to make the right decision and not be flooded with data. This [acquisition] helps extend our reach to get at that data.”

—Michael Babb, editor, Control Engineering Europe, and
Peter Welander, process industries editor, peter.welander@reedbusiness.com, Control Engineering Weekly News