(Reuters) - Diversified U.S. manufacturer Honeywell International Inc. is to buy EMS Technologies Inc for about $506 million to boost its presence in the mobile and satellite communication market.
Honeywell offered $33 a share for EMS, a wireless communications products maker, representing a premium of 33 percent to EMS' last closing price.
In May, Reuters had reported that EMS has drawn initial interest from companies that include Comtech Telecommunications Corp and Honeywell.
Honeywell said the deal would reduce 2011 earnings by 3-4 cents a share, but would add to profit in the next fiscal year.
DOW JONES NEWSWIRES ? Wendy's/Arby's Group Inc. agreed to sell most of its struggling Arby's chain for $130 million in cash to a group led by private-equity firm Roark Capital Group in a deal that leaves it with an 18.5% ownership stake in the fast-food restaurant.
Wendy's/Arby's turnaround efforts at Arby's have helped improve sales, though the company had been under pressure to sell Arby's because its performance had been lagging until recently. The company said recently it had received multiple bids for the chain.
Under the deal, expected to close in the third quarter, Wendy's/Arby's will receive about $130 million in cash, and the 18.5% stock interest in Arby's is valued at about $30 million. Roark will assume about $190 million of Arby's related-debt. The transaction triggers a tax benefit of about $80 million to Wendy's/Arby's. The parties said the deal has a total value of about $430 million.
Roark will invest about $180 million at the closing, covering the cash portion of the deal, transaction costs and capital for Arby's. Roark also committed to spend up to an additional $50 million through 2013 in capital.
Wendy's/Arby's in May reported that its first-quarter loss narrowed as revenue edged up amid sales growth at Arby's. However, it lowered its full-year earnings estimate owing to significantly higher commodities costs.
Atlanta-based Roark on Monday also said it has acquired Il Fornaio (America) Corp., owner of the casual-dining chain Corner Bakery Cafe and the upscale Italian Il Fornaio Restaurants & Bakeries business. Terms of the deal weren't disclosed.
Roark's food and restaurant holdings also include Focus Brands--parent of chains such as Cinnabon and Carvel Ice Cream.
Wendy's/Arby's shares closed Friday at $4.52 and were inactive premarket.
In his time as president and CEO of Syniverse Technologies Inc., Tony Holcombe has seen many different opportunities for growth and expansion come across his desk. From new products to new markets to old competitors exiting the space, there is frequently a chance for Holcombe to expend company resources securing a new entity that might allow Syniverse to operate in a new space.
But the road to growth can be lined with potholes before you encounter even a streak of golden pavement.
That’s why Holcombe places an emphasis on due diligence that goes beyond the bottom-line revenue numbers. Just because a growth opportunity will make you more money in the short term doesn’t mean you’ll be able to sustain the revenue. The success of your expansion will hinge on your strategy and your people.
In short, Holcombe says you need a plan, and then you need your people to buy in to your plan. If you lag strategically or on the teamwork front, you probably made a wrong turn somewhere, and the new venture is ripe for a downfall.
“We have a very clear strategy,” Holcombe says. “Our strategy is that we need to be able to integrate the acquisition immediately. That means we have to have a plan laid out, and we have to think through how we get the people integrated, how do the customers get integrated, how do the systems get integrated. The good thing is, that forces you to get a lot of questions answered throughout the process — questions that you might otherwise put off.”
Armed with a policy of thorough due diligence, Holcombe has been able to carefully select the acquisitions his $483 million company has pursued, and Syniverse has weathered the recession well.
Develop a plan of attack
To decide which growth opportunities to move on, you need to first define your field of play. You need to know what it is your company does well, the skills and talents your people bring to the table, what type of resources you are willing to invest in a growth opportunity, and then measure the opportunity against those criteria.
If your company doesn’t measure up, you either need to move on or add the competencies and assets that will allow you to make the new addition to your business a success.
But it all comes back to defining what you do well as a business. It’s the first question you should ask of yourself and your leadership team.
“When we look at new markets or services, whether it’s something we want to build or something we want to buy, we always challenge ourselves by asking, ‘What do we know how to do?’” Holcombe says. “If it’s something we don’t know how to do, generally speaking, we’re not going to get involved in it. You want to be really focused on your strengths, and build and buy based on those strengths.”
You need to match your competencies not just to the product or service you are considering adding to your arsenal but to the entire process of developing, marketing, selling and supporting it.
“You don’t get involved in things you don’t know how to do, and that mentality has to run from the actual product or service, how it is priced, how it is sold, what is the business model for it, what is the sales channel for it, what is the value-added service you’re providing to the customer,” Holcombe says. “When we do that, we kind of check it off against an internal matrix to see if it fits with what we do.”
But the most important question you can ask when deciding whether to move on a growth opportunity is a question of culture. The acquisition, service, process, any new people you might add — does it all fit with the values and mission of your company?
A bad cultural match could have long-term effects for your business, especially if you’re considering a large-scale addition that will significantly alter your company.
“If you’re considering an acquisition, culture is what I would consider the most important thing,” Holcombe says. “Are the two cultures going to work together? If we try to put a culture into our culture and it’s completely disparate, what happens is we lose all the people. So that has to be part of the due-diligence process. You’re trying to find out if these people in the company to be acquired have the same type of approach to customers that you have, do they have the same business model, do they have the same kind of service mentality? If those things fit, that is kind of the key issues for us.”
And you have to be willing to walk away if the pieces don’t fit.
“We’ll walk away from a lot of deals where the business model doesn’t fit, but we’ll also walk away from deals where we could tell the culture just wasn’t going to fit well,” he says. “That is really critical for us as a global company with 1,400 employees and 600 of them outside the U.S. We have to knit not only our culture but also a global culture.”
When considering an acquisition, Holcombe wants managing members of all departments at Syniverse to come to the conclusion that it’s a good move.
The “conclusion” factor is an important element in the vetting process. Holcombe doesn’t want a bunch of ministers preaching to a like-minded choir. He wants debate, opposing viewpoints and some amount of disagreement. If those differences among the leadership team can be ironed out over time, it’s probably the right move. If the differences can’t be resolved, it’s time to step back and figure out why.
“Everybody needs to have that ownership,” Holcombe says. “From the sales leaders to technology leaders, office leaders, finance, human resources, legal, everybody has to own their piece of that integration. We all have to come to an agreement that this is a good deal, we all have to agree that we can make it work.”
To ensure that the various departments within Syniverse communicate with one another, Holcombe’s merger and acquisition team work as part of the leadership team, not as a separate field unit that beats the bushes for purchase opportunities, then hands them over to upper management.
“We don’t do what I’ve seen a lot of companies do,” he says. “We don’t have an M&A team that just goes out and buys things, kind of throws them over the wall and says, ‘OK, we think this is a good idea; now you guys figure it out.’ My M&A team is part of the executive team, and we all figure it out together. The ownership is established, everyone has bought in to it, and if some members of the executive team think this isn’t going to work, we hash that out before we buy the acquisition. That is the key to making sure we get it right.”
Holcombe wants the initial discussions between members of upper management to create a hypothesis of how the acquisition will be integrated into the company. With that basic assumption in place, he and his leadership team set about challenging the assumption throughout the due diligence process. As questions arise and new information is gathered by the due diligence research team, the assumption is refined and, in most cases, dissenters have their concerns satisfied.
However, discussion and research must lead to an ultimate decision. As the leader, that responsibility falls on your shoulders.
“We’ll talk through why someone doesn’t agree with a certain area, we’ll bring our due diligence team back together for more information,” Holcombe says. “We may adjust the thought process about how we’re going to pull it all together. But it’s also my responsibility as CEO to say, ‘OK, we’ve debated it; I need to make the call.’”
In the end, if debate and discussion lead nowhere constructive, you’re probably not headed down the right growth path for your company.
“If you don’t have that high degree of buy-in from your team, chances are you’re not doing the type of deal you need to do, and you might think about trying other things with your time and effort,” he says. “But you do want to get everyone involved. You want everyone on the leadership team to have the same information. You want to give everyone a chance to vocalize their issues or concerns. You want the team to own the decision, not just one individual.”
Blend, don’t stitch
When you have decided to add a new unit, acquisition, product or service, you want to make the addition as seamless as possible. You want the acquired entity to blend with your company. You don’t want to stitch it on so the seams show.
Solving that problem comes back to combining cultures. There are different ways to accomplish that, based on the size and nature of the acquisition.
At Syniverse, Holcombe’s team has completed one acquisition on average of every 12 to 18 months during his tenure. They’ve ranged from a 2007 acquisition that added more than 100 employees in Germany to a smaller acquisition of a Boca Raton-based company.
The Boca Raton acquisition was a product-based addition. The European acquisition, which also added personnel in England, was much more focused on the people involved and took more resources on Syniverse’s part.
“The key was getting our teams in Tampa and Germany to work together,” Holcombe says. “We tried to cross-pollinate the teams; we had them travel back and forth and spend a lot of time talking about the project plan. When you do an acquisition on a global basis, there are just differences on a cultural basis on how people communicate, what people say to each other, do they interpret things differently. Those are all things that make the process more complicated. Geography and time zone differences make it very difficult to pull that kind of information together.”
That’s why Holcombe stays involved in the merger and acquisition process at all times. Though you don’t want to micromanage your people, when it comes to moves that could radically shift your culture, you need to be hands on. You need to be the voice that is reinforcing the common themes you want all areas of your organization — both older and newer — to live by.
“First, I want to go back to how the new part of the organization treats customers,” Holcombe says. “Are they service-oriented, do they put customers first, do they make sure they do all the right things for customers? That is our big key, because if you’re working on a problem together and they’re putting customers first and you’re putting customers first, you’re all working toward the same goal. Then you know you’re living by the same cultural principles, which is good for the entire organization.”
How to reach: Syniverse Technologies Inc., (813) 637-5000 or www.syniverse.com
The Holcombe file
president and CEO
Syniverse Technologies Inc.
Born: Carrollton, Ga.
Education: History degree from Georgia State University
First job: I started stringing barbed wire on my grandparents’ farm when I was 14 or 15 years old. Being out there stringing barbed wire in the hot Georgia sun convinced me at a pretty early age that I wanted to go to college.
What is the best business lesson you’ve learned?
The purpose of business is to create a customer. There is nothing more important than that for a business.
What traits or skills are essential for a business leader?
Think strategically and understand the markets of your customers. Your job is to lead the organization to different levels, which means you have to love the organization and meet the needs of your customers and shareholders.
What universal truth have you learned about leadership?
You need to get focused on the ethics and integrity of the people you hire, and you need to set that example yourself. Be honest and forthcoming, and let people know well in advance if something is going to happen. And if you mess something up, work to satisfy any customers that were affected.
What is your definition of success?
Do we retain employees, and keep our shareholders and customers happy? If you do that, you’ve satisfied everyone involved in your business.