Honeywell Acquires Energy Services Group

April 17, 2006
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Joe Puishys
In agreeing to acquire a San Diego, Calif.-based energy services group, Honeywell believes it has strengthened its portfolio in providing energy management solutions for government, military, and commercial customers.

Honeywell recently announced that it reached an agreement to acquire the energy services group of Sempra Generation, a subsidiary of Sempra Energy. According to Honeywell, the business will be integrated into Honeywell Building Solutions (HBS), a global provider of integrated building management and control systems, and energy management solutions.

No terms of the transaction were disclosed. The deal is expected to close early in the second quarter of this year.

"The acquisition of Sempra Generation's energy services group expands sales coverage and expertise for HBS in key segments, and demonstrates our commitment to grow this business," said Joe Puishys, president of HBS. "Rising energy costs present a significant challenge to our customers, and Honeywell Building Solutions is committed to helping them better manage those costs and maximize energy efficiency."

Sempra Generation's energy services group provides energy-performance contracting solutions for federal, state, and local government facilities, plus hospitals, health care facilities, colleges and universities, and other commercial entities. These services are designed to enable customers to lower their energy and operational expenses by improving efficiencies or generating alternative power. This group also designs, develops, and manages construction of energy-efficient facilities.

"Energy management is a fast-growing business for Honeywell Building Solutions. The acquisition of Sempra Generation's energy services group is a great step forward for our business," said Puishys. "The new organization will strengthen HBS' energy sales coverage, particularly in the East, West and Gulf regions of the United States, accelerate our growth, and bring more expertise to the organization."

When asked if this was another case of an unsuccessful attempt by a utility to run an HVACR-related business, Puishys diverted the question to Sempra Energy to respond. "Honeywell has long been active in the energy solutions segment, serving government and commercial customers," he said. "This is not our first acquisition in the energy arena. Several years ago we acquired a successful energy savings performance company, which also served the federal government and military."

HBS is considered one of the leaders in the energy services industry, helping organizations conserve energy, optimize facilities and equipment, and improve security. According to Honeywell, the company has completed more than 4,000 energy-saving projects, and delivered more than $3 billion in energy and operational savings to customers.

Honeywell said Sempra Generation's energy services group has extensive experience in providing performance contracts to higher education and government customers on the federal, state, and local levels, plus it has the expertise to successfully deliver large, complex energy conservation projects. According to Honeywell, Sempra Generation's energy services group can also provide design-build services for energy infrastructure projects.

"Sempra Generation's energy services group is an ideal fit with our business," said Puishys. "Both organizations have a strong history of providing effective energy management solutions to customers. Honeywell is a pioneer in the sale of energy savings performance contracts and has completed thousands of energy projects on behalf of customers."

Frost & Sullivan, a global growth consulting company, recently selected Honeywell as the recipient of a 2006 Industry Innovation & Advancement Award for its industry-leading approach of integrating supply- and demand-side measures to help its clients save on energy expenses.

Honeywell does not disclose financial information below the segment level, but it did state its energy operations are growing strongly. "In 2005, energy services revenue grew more than 20 percent year-over-year," said Puishys. "Sempra Generation's energy services group also has a history of strong growth, and we're excited to make it a part of Honeywell."

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Publication date: 04/17/2006

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