05 September 2009
RMG will be integrated into Honeywell Process Solutions, which is part of Honeywell's Automation and Control Solutions business group.
Founded in 1931 from a previous company that had its origins 1908, RMG made valves for gas cylinders and supplied regulators to fill Zeppelin rigid airships with hydrogen gas.
After the war the company switched to gas pressure regulators and safety devices for the then-emerging natural gas industry.
The company was eventually renamed RMG + Messtechnik GmbH in 1964. Today RMG specialises in the design and manufacture of natural gas control, measurement and analysis equipment including flow metering technology, regulating products, as well as safety devices.
‘Until ten years ago, it was strictly a German company,’ explained Henri Tausch, VP and General Manager for Honeywell Field Solutions (HFS). Then it began an era of international expansion, acquiring local gas metering companies such as Bryan Donkin in the U.K. and Canada, Mercury Instruments in the U.S., and Gazomet in Poland, as well as joint ventures in eight other countries. Mr. Tausch is a Dutch engineer who has been with Honeywell since 1988 and is presently based in Delft, The Netherlands—at the site of another Honeywell acquisition in 2007, Enraf Instruments.
RMG has been working with Honeywell for several years, primarily through Honeywell’s UOP division. And although Honeywell is a player in the gas industry—it has made several acquisitions in recent times, Callidus Technologies and Maxon Corp., both of them in gas combustion controls—it was lacking the gas metering and regulation areas of the business, something RMG will fill in for them.
‘RMG in fact aligns strongly with Honeywell's field instrumentation and control solutions,’ says Mr. Tausch. ‘For example, RMG's gas flow meters and regulating devices complement Honeywell's pressure and temperature transmitters, as well as liquid natural gas (LNG) level gauges.’
The acquisition will build Honeywell's presence particularly in the areas of natural gas transportation, storage, distribution and industrial consumption.
Enraf and RMG: the parallel
Beyond that, Mr. Tausch sees a definite parallel with the Enraf and RMG acquisitions.
Enraf’s instruments and expertise deal with custody transfer of liquid products, while RMG does the same thing with gas products, he says. Besides its instrument business, Enraf builds blending and injection skids. RMG has an instrumentation and pressure regulation business, but at a higher level of integration, it builds stations for gas control and distribution.
Building stations is a solutions business, something of great interest to Honeywell as a means to leverage its instruments and control systems. A typical station may range in size from €50,000 to €1 million, or even more, and the industry need to build ‘thousands’ more gas stations around the world, according to Mr. Tausch. ‘Gas is becoming more important because it’s clean,’ he says.
‘But there’s a huge supply and demand imbalance, and that indicates a big need to increase infrastructure for gas distribution,’ he says. Natural gas is a clean fuel alternative that is becoming increasingly popular in both mature and emerging markets around the world.
Enraf’s solutions business, building skids for blending and injection, is also in demand, but to a lesser scale than RMG’s station business, Mr. Tausch says. While thousands on metering stations need to be built, in the liquids areas, the need is ‘in the hundreds, or perhaps at the most the low thousands.’
Enraf was acquired by Honewell in 2007 from Delft Instruments for $260 million. It had sales in 2006 of $130 million. RMG sales in 2009 is estimated at $290 million and the selling price of the company is nearly $400.
How do the German owners feel about being acquired by an American company?
‘Our business, customers, and employees will benefit from becoming part of Honeywell,’ said Dr. Henning Bähren, CEO of RMG Group.
‘RMG is already a global leader and this acquisition will give us access to broader growth opportunities and distribution channels, and gives us the ability to expand our product offerings in a world with ever-increasing demand for clean energy. Honeywell's industrial offerings will allow us to create enhanced automation and control solutions for all of our customers worldwide.’
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