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Swedish firm buys Intergraph for $2.25b

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Saturday, July 10, 2010

In a deal where Swedish firm Hexagon is pretty clearly paying a premium for size, the company has purchased software firm Integraph - which plays in the security space as a PSIM provider, in addition to providing CAD and other design services for large projects - for $2.25 billion.

See the full release here.

With my head under water coming back from vacation, I apparently missed this deal when it was announced on July 6. Thanks to John Honovich and Twitter for bringing it to my attention.

With announced 2009 revenue of $770 million and EBITDA of $189 million, that’s a pretty steep multiple Hexagon is paying: 3x revenue; 12x EBITDA. Not bad if you can get it.

However, Intergraph is a very global company (approximately 40 percent of Intergraph’s sales were generated from the US, 36 percent from EMEA, 15 percent from Asia Pacific and 9 percent from the rest of the world) with 4,000 employees and can do a lot of things that not many companies can.

To call them a PSIM maker is to undersell them greatly. Yes, they can do PSIM-type software, providing command and control capabilities and situational awareness, but they’ve got their fingers in lots of security-based areas. They were even the first to demonstrate and implement a new standard for automating the transmission of alarm signals to 911 centers.

What will Hexagon do with them? Try to figure it out from this:

Intergraph fulfils all prerequisites that Hexagon has set for software driven expansion. The combination of Hexagon’s leadership in solutions that capture rich geospatial data using aerial and ground based point cloud sensor technology, with Intergraph’s leadership in GIS and CAD application software, will enable the enlarged Hexagon Group to develop and provide unrivalled integrated solutions to clients.

Following the acquisitions of Brown & Sharpe in 2001, Leica Geosystems in 2005 and NovAtel in 2007, Intergraph is the natural next step due to its global software capabilities. With the integration of Intergraph, Hexagon will cover all aspects of the measurement technology market from capturing three dimensional data from ground, air and space, processing data to creating, managing and delivering information via GIS and CAD solutions.

“With the acquisition of Intergraph we are able to seamlessly connect the real world with maps or drawings. By adding Intergraph’s technologies to our product offering, Hexagon will be able to create new exciting solutions that will change the way our customers operate in several industries across the world. We are indeed excited about the future for our Group”, says Ola Rollén, President and CEO of Hexagon AB.

Basically, I think they like that they’ll be able to capture information in cool and 3D-type ways, and then render that information and provide it to an end user in a way they can actually use on a day-to-day basis. I like that phrase, “seamlessly connect the real world with maps or drawings.”

I’ve got some calls in to see how this affects the market, if at all. It’s not really a play that affects many people in the traditional security channel, I’m guessing - just the very high-end part of the market.