Delft Instruments to sell its Enraf division to Honeywell

27 June 2007

The Executive Board of Netherlands-based Delft Instruments announced a definitive agreement, valued at approximately €200 million (approximately £135 million) for the sale of its Enraf division to Honeywell Process Solutions (HPS). The division in 2006 had sales of approximately €100 million (approximately £67 million).

Since 2004 the majority (89%) of Delft Instruments has been owned by private equity firms AlpInvest Partners and Advent International. It has an annual turnover of approximately €243 million (approximately £164 million). Its other major holdings are in medical instrumentation.

Paul Orzeske, HPS EMEA president, said the move would greatly expand Honeywell’s global portfolio in high-growth, high-service industries, especially in 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 in Delft, The Netherlands, about a two hour drive from Honeywell’s main European office in Brussels.

Mr. 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 will be evaluated by Honeywell in the context of its much larger global organisation. “Our service organisation generally does not work on third party equipment,” he said, “but we are going to integrate the servicing of 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).

Mr. Orzeske said that Honeywell’s recent announcement to resell Krohne instruments would not have any impact on the Enraf deal, because there is no overlap between the two product lines. 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 he said. One speciality product, the LDT (level, density, and temperature) is capable of measuring the linear height of oil in a tank and detecting stratified layers.

Honeywell will continue to look for acquisitions, said Mr. 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.”

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