Honeywell acquisition of Measurex means stronger controls supplier

Pulp & Paper, Mar 1997 by Ole-Kristian Fadum

$600-million dollar deal combines the strengths of Honeywell's pulp mill controls and DCSs with Measurex's paper machine systems

HONEYWELL INC. AND MEASUREX CORP have reached an agreement, announced on January 27, to merge the two companies in an all-cash transaction valued at about $600 million, or about $35 per share. Honeywell will start a tender offer for all Measurex stock in an agreement approved by the board of directors of both companies.The merger is expected to be completed this month.

Honeywell has been very active in expanding its products for the pulp and paper industry.This has been achieved by a combination of internal developments as well as acquisitions.This latest proposed acquisition of Measurex will give Honeywell a very strong presence in the pulp and paper industry. It combines Honeywell's strength in distributed control systems (DCSs), pulp mill controls, and process control services with Measurex's strengths in sensor-based paper quality control systems (QCSs), paper machine actuators, and paper quality control services.

Markos Tambakeras, president of Honeywell Industrial Control, describes the merger between Honeywell and Measurex as outstanding synergy. We are extremely compatible. There is an uncanny similarity between the mission statements of Honeywell and Measurex.

John Gingerich, president and COO of Measurex will be heading up the new Honeywell-Measurex organization, reporting to Tambakeras.'I am very positive on this merger," Gingerich says. "It gives Measurex the broad systems base that we need to be successful in the pulp and paper industry."

Customers and competitors alike will see this as an end of an era. David Bossen, the founder of Measurex, will now retire after assisting in the merger transition. For Bossen, this ends a most remarkable career as a supplier to the paper industry. He built his company-from its beginnings in 1968 into a $416 million company in 1996-based on the powerful idea of providing and guaranteeing results for his customers. More than anybody, he is responsible for the move of the paper industry to advanced computerized control.

IMPACT ON PRODUCTS. The merger is good for both companies because it gives Honeywell an increased market and product presence in sensor-based quality systems for the paper mill, while Measurex gets an excellent distributed control system platform upon which to base its sensors and applications. Individually, both companies had attempted this development internally, but were not as successful as they had wished.

According to Tambakeras, there is excellent synergy between the Honeywell TPS (Total Plant Solution) system and the Measurex QCS system.The new TPS system will be based on Intel technology, as well as that from Motorola. This will work well with Measurex's technology, which is Intel-based.

"The TPS system will be the system platform for all the Measurex systems," says Tambakeras. "Windows NTTPS provides an excellent opportunity to leverage the technology within Honeywell and Measurex. Honeywell's strength complements Measurex in control systems.

For Measurex, there was a great need to find a distributed control systems partner, since these systems are moving to Microsoft NT operating systems and the architecture is moving to fieldbus. We did an analysis of what it would take to be a world class fieldbus-based DCS supplier" says Gingerich. "We decided that it would be better for us to look at alliances and acquisitions. Now, instead, we are being acquired by Honeywell, which I see as very positive.'

IMPACT ON THE INDUSTRY. The impact of the merger on the paper industry will vary with the type of purchase the industry prefers. Paper companies have been moving in two major directions when buying control systems. First, there is the move to a totally integrated control solution that includes quality control, distributed control, and programmable logic control. This is desired by paper companies who want a single source of responsibility. Other advantages of this integrated approach include the following:

A single display for operators, engineers, maintenance personnel, and managers

A single configuration tool

A single documentation tool

The ability to have one uniform alarming systems, which makes it much easier to determine the sequence of events when there is a process upset.

The integrated system approach is most desirable on new process installations or major process rebuilds.This is especially important in Southeast Asia and Latin America, where new mills and machines continue to be built.

The other approach is to buy parts of the control system as existing mills upgrade their existing processes and control systems.Thus mills may add a DCS to a machine that already has a quality control system. Or mills may add profile controls and actuators to an existing sensor-based quality control system.This approach requires open systems, as different suppliers are often desired in the different control areas. In part, this is due to many mills having standardized on specific quality control system and DCS suppliers for their mills.