Invensys commits to industrial businesses; plans to divest the rest
London—Invensys has committed to its businesses most closely related to automation and controls by announcing plans to divest much of the rest, largely Baan and most Energy Management Division units, representing $4.58 billion in sales (£2.9 billion) for the year to March 2002.
Among Invensys businesses to be kept and bolstered by debt reduction and related acquisitions are the Production Management division companies of Foxboro, Triconex, Wonderware, Eurotherm, APV Solutions & Services, and SimSci-Esscor. IMServ and certain data management technologies within the Energy Management division also will be added to Production Management. Invensys Rail Systems (formerly in the "Development Division") will be kept and operated separately.
Among businesses to be sold over the next 18-24 months are Baan, product-based Appliance Controls, Climate Controls, Metering Systems, APV Baker, Powerware, Lambda, Teccor and Hansen Transmissions. Until divestiture, these will be managed in an expanded Development Division.
"Our strategy remains the same," says Sasan Goodarzi, president of Invensys Manufacturing and Process Solutions (which is much of what will be left), except that in one space and with focus on production management, "we're going to play to win." Mr. Goodarzi told Control Engineering April 22 that the move will allow the company to retire its debt, improve credit ratings, lower the cost of borrowing, and invest more in current businesses, with internal development and strategic acquisitions. Mr. Goodarzi says he and other leadership will remain, including Rick Haythornthwaite, Invensys ceo, Leo Quinn, chief operating officer of Invensys Production Management, and Mike Bradley, president of Invensys Wonderware/ArchestrA.
"Customers' reactions have been very positive about the announcement," Mr. Goodarzi says. "They can read between the lines" about what this means for the technologies that matter to them most, he says, including the ArchestrA industrial software framework, which will be deployed throughout remaining units.
This divestiture announcement follows a February 2002 Invensys restructuring and $2.84 billion sell-off of other "non-core" businesses, including Rexnord, Drive Systems, and Sensor Systems units. Invensys said last year's moves allowed the company to consistently meet loan payments and "margin improvement has been achieved in a significant number of businesses, most notably in Production Management," according to an April 15, 2003, "Trading Update" announcement.
The statement continues, "Proceeds raised from asset sales will be used to satisfy the cash requirements of the Group, including reduction of indebtedness and funding of pension schemes, as well as the investment required to grow market share in Production Management and Rail Systems. In these circumstances, the Board does not feel it appropriate to recommend a final dividend for the year to 31 March 2003 (2002: 1p).
"On completion of these actions, the Board believes that Invensys will offer investors a Group possessing higher-quality growth prospects and leading competitive positions, financed by a stronger balance sheet. In seeking to create maximum value for shareholders, the Board's priority will be to ensure stability and assurance for employees and customers and optimal participation in recovering markets.
"Invensys will provide further details of these plans at the announcement of its full year results on 29 May," the statement says. Invensys operates in more than 60 countries.
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Control Engineering Daily News Desk
Mark T. Hoske, editor-in-chief