The recent merger of Honeywell and AlliedSignal forming a conglomerate with revenues of $25 billion will have a limited impact on the automation industry due to the lack of automation synergy between the two. A report from Data Monitor suggested that the merger has lessened the strategic importance of the IAC division. The US stock market favours managers who are able to consolidate large companies and Honeywell are aiming to keep apace with GE and Tyco who currently have p/e ratios of around 30. AlliedSignal announced an after-tax profit of $400 million against $350 million in the second quarter a year ago. Furthermore, with the main synergy being the in aerospace sector it will become the largest operating unit with around 30% of total revenues.
Nevertheless, the consolidation propels Honeywell to fourth place in terms of group revenues of automation vendors. Siemens, ABB and Mitsubishi Electric have higher group revenues.
In the long term the huge conglomerates will continue to acquire the smaller automation competitors with Honeywell looking for further automation businesses to add to its division.