Digital Infrastructure and Solutions Company Expands and Focuses

Digital Infrastructure and Solutions Company Expands and Focuses

In brief: During its brief history as a collection of Hitachi Ltd. data properties, Hitachi Vantara continues to grow and remake itself. It has now added Hitachi Consulting and Intelligent Data Cataloging company Waterline Data. The new company combines IT Infrastructure, Data Management and Analytics.

The first news is the combination of Hitachi Vantara with Hitachi Consulting as one company to create a new digital infrastructure and solutions company.

The new Hitachi Vantara aims to become the world’s preferred digital innovation partner by unlocking the “good” in data that benefits customers, raises the quality of people’s lives and builds a sustainable society. Hitachi Vantara will specifically bring a competitive edge to the digital domains that matter most – the data center, data operations, and enterprise digital transformation.

The new Hitachi Vantara combines the best consulting-led digital solutions and vertical industry expertise of Hitachi Consulting with Hitachi Vantara’s IT domain expertise. Going forward, the integrated company will help customers develop practical, scalable digital strategies and solutions that transform operational processes, improve customer experiences and create new business models to drive innovation and growth.

For example, the new company will offer a holistic manufacturing industry practice as one of several vertical industry practices. The manufacturing practice will integrate consulting methodologies for addressing quality, customization, sustainability and new business models with data-driven solutions such as Lumada Manufacturing Insights from Hitachi Vantara, which integrates silos of manufacturing data and applies AI and machine learning to evaluate and enhance overall equipment effectiveness (OEE).

“A barrage of data and technology is disrupting enterprises and industries the world over,” said Toshiaki Tokunaga, chief executive officer and chairman of the board, Hitachi Vantara. “Through the integration of Hitachi Consulting, the new Hitachi Vantara will be uniquely equipped with the capabilities our customers need to guide them on their digital journeys. We’re going to be the company that helps customers navigate from what’s now to what’s next.”

The Hitachi Vantara portfolio is built upon a foundation of world-class edge-to-core-to-cloud infrastructure offerings, including the recently introduced Hitachi Virtual Storage Platform (VSP) 5000 series, the world’s fastest data storage array. The portfolio further features AI and analytics solutions, cloud services for application modernization, systems integration and change management services for SaaS-based ERP implementations and migrations, and Lumada-based digital industrial solutions. Hitachi Vantara’s offerings are all backed by world-class business consulting, deep experience in improving organization effectiveness, co-development capabilities and global delivery services.

With its expanded capabilities, the new Hitachi Vantara will play a key role in advancing Hitachi’s 2021 Mid-term Management Plan, which aims to make the company a global leader through “Social Innovation Business.” The Social Innovation Business strategy centers on combining Hitachi’s industrial and IT expertise and products to create new value and resolve social issues.

Hitachi Vantara will help advance the plan by expanding revenues from digital business, by digitally transforming Hitachi’s industrial businesses, by fueling international growth, and by delivering social, environmental and economic value which helps customers contribute to the attainment of United Nations’ Sustainable Development Goals.

As announced in September 2019, Toshiaki Tokunaga, a 30-year Hitachi veteran who has successfully transformed several Hitachi businesses, will serve in the dual role of chief executive officer and chairman of the board of Hitachi Vantara.

The company’s two business units, Digital Infrastructure and Digital Solutions, will be led by Presidents Brian Householder and Brad Surak, respectively. Hitachi Vantara today also announced details of other appointments to its executive leadership team.

Hitachi Vantara Will Integrate Advanced Data Cataloging Technology Into Lumada Data Services Portfolio

In further news, Hitachi Vantara announced acquisition of the business of Waterline Data, which is headquartered in Mountain View, CA. It provides intelligent data cataloging solutions for DataOps that help customers more easily gain actionable insights from large datasets and comply with data regulations such as GDPR.

Waterline Data delivers catalog technology enabled by machine learning (ML) that automates metadata discovery to solve modern data challenges for analytics and governance across edge-to-core-to-cloud environments. Waterline Data’s technology has been adopted by customers in the financial services, healthcare and pharmaceuticals industries to support analytics and data science projects, pinpoint compliance-sensitive data and improve data governance. It can be applied on-premises or in the cloud to large volumes of data in Hadoop, SQL, Amazon Web Services (AWS), Microsoft Azure and Google Cloud environments.

Waterline Data’s patented “fingerprinting” technology is the cornerstone of its solutions, removing one of the biggest obstacles to data lake success. Fingerprinting uses AI- and rule-based systems to automate the discovery, classification and analysis of distributed and diverse data assets to accurately and efficiently tag large volumes of data based on common characteristics.

Integrating Waterline Data technology with Hitachi Vantara’s Lumada Data Services portfolio will provide a common metadata framework to help customers break down data silos distributed across the cloud, the data center, and the machines and devices at the edges of their networks. By applying DataOps methodologies to the unified datasets, customers can more rapidly gain insights and drive innovation.

“Our research illustrates that almost half of enterprise data practitioners are spending more than 50% of their time simply trying to find and prepare data for analysis. Data catalog products have emerged in recent years as strategic imperatives for enterprises seeking to address this challenge while also improving data governance,” said Matt Aslett, research vice president, 451 Research. “This acquisition is logical and strategic: Waterline Data’s capabilities are a complementary fit for Hitachi Vantara and its Lumada Data Services portfolio. Adding Waterline Data furthers the company’s ability to address growing demand for products and services that deliver more agile and automated approaches to data management via DataOps: helping enterprise consumers of data ultimately leverage information in a fluid, yet governed way.”

“Hitachi Vantara provides customers with the digital building blocks, DataOps approaches and industry solutions they need to transform their organizations through data-driven insights,” said Brad Surak, president, Digital Solutions, Hitachi Vantara. “Waterline Data technologies complement Hitachi Vantara’s DataOps expertise and will become key offerings in the Lumada Data Services portfolio, bringing our customers greater visibility, tighter quality control, improved compliance and better management of their data.”

Financial terms of the transaction were not disclosed. The acquisition of Waterline Data is subject to customary closing conditions and it is expected to close in the fourth quarter of Hitachi’s fiscal year 2019 (ending March 31, 2020).

Upon completion of the acquisition, Hitachi Vantara will make Waterline Data technologies available as standalone solutions as well as integrated components of the Lumada Data Services portfolio.

​​​​Motor Drives Increasingly An Enabler of IoT Says Market Intelligence Firm

​​​​Motor Drives Increasingly An Enabler of IoT Says Market Intelligence Firm

Just before Thanksgiving, I had the opportunity to talk with Adrian Lloyd, CEO of Interact Analysis. Interact is a new market research and intelligence company composed of industry veterans of other firms. The company researchers perform many more interviews than the industry norm combining with deep regional manufacturing data in order to achieve better and more granular results.

Company CEOs provided insight to me years ago about the accuracy (or lack) of many market analyses. I’m always in search of better information. We’ll try this one.

Interact has just released two reports—low voltage AC drives and motion control.

2019 low voltage AC motor drives report from Interact Analysis

  • Decentralized and motor mounted drives to show the strongest growth
  • Danfoss overtook Siemens in 2018 to be number 1 drives supplier to the EMEA region
  • Cabinet mounted general purpose drives have largest percentage of sales by product type

The research shows that growth in the intralogistics and materials handling sector has led to increased demand for decentralised and motor mounted drives, leading them to show the strongest growth over the five-year forecast period out of all seven product types covered. Cabinet mounted general purpose drives account for nearly half of drive sales globally, but also represent the slowest growing product type.

Meanwhile, from a regional perspective, although ABB is the number 1 drives supplier on a global basis, Danfoss has overtaken Siemens to be number 1 in EMEA. The Americas is predicted to be the fastest growing drives market for 2019, while the market in EMEA is shrinking, and China continues to occupy the largest share of the market (43% by unit shipments in 2019).

Interact Analysis has pioneered a new forecasting approach that gives an unprecedented level of detail. For example, users could choose to view anticipated demand for drives under 2.2 kW in the Indian packaging market. This is possible because the report is underpinned by 12 years of data on industrial production (the value of goods produced) and machinery production (the value of the machines used to produce goods). This information comes from Interact Analysis’s Manufacturing Industry Output Tracker – a big data tool that aggregates national manufacturing surveys from all major manufacturing economies in a set of over 1.2 million datapoints.

Lloyd says of this report: “In 2018 average drive prices fell by 2.7% compared with 2017, and we expect this trend to continue. To compound this, 2019 is experiencing a slowdown in the market. Yet the drives industry has reason for positivity. And not just because we expect the market to rebound in 2020.

“The world is becoming increasingly automated – in fact it is becoming rare to open a national daily newspaper and not read something about how automation is impacting the economy. Automation growth sectors, such as eCommerce warehouses, are creating vast new opportunities for drives. In the longer run, it is very positive for drives manufacturers that our research shows drives buyers increasingly see drives as the front line of predictive maintenance and industrial IoT.

“Most drives reports model industry dynamics by simply comparing the growth of the drives market with the growth of the entire manufacturing sector. Ours is different. Interact Analysis’s Manufacturing Industry Output tracker compares the value of goods produced with the value of machines used to produce goods to give a whole range of fresh new insights unavailable in any other drives report.”

Motion Control Market to Exceed $15bn by 2023

New 2019 motion control market report from Interact Analysis reveals

  • Despite a short-term dip in 2019, longer term forecasts predict solid growth
  • Increased reliance on industrial robotics a significant contributor
  • Growth rate to exceed that of global manufacturing production by 2020

Interact Analysis has released a new market report – Motion Controls – 2019 – pointing to strong growth over the next four years for motion control products.

Despite a small decline in 2019 (-3.8%) the report outlines how the market for motion control products will grow strongly, ultimately exceeding $15bn in 2023. Also noteworthy is the firm’s belief that the motion control market will outpace growth of global manufacturing production from 2020 onwards. The positive outlook holds true despite the torrid time currently facing machine tool vendors which, as the single largest consumer of motion control products, generated over a third of motion control revenues in 2018.

Interact Analysis points to several sectors which are helping to drive a more positive outlook for motion controls. These include food & beverage machinery, packaging machinery, robotics and material handling equipment, especially equipment for warehouse automation and intralogistics. Together these sectors generated just under a quarter of total motion control revenues in 2018 and are forecast to account for closer to 30% in 2023.

The report outlines further factors strengthening the outlook for motion control demand, including the trend for decentralization. Here higher-protection ratings are helping to advance the market for particular motion products. Although even combined the opportunity is small compared to the total (representing only 2.4% of the global market in 2018), the findings show that revenues for both products are projected to experience higher growth than the rest of the market, driving their combined value to exceed $500m in 2023.

Geographically, six regions – China, USA, Japan, Germany, Italy and South Korea – will continue to dominate market revenues. China, in particular, is expected to add significant revenues over the next four years, making it almost twice as big as the United States. In industry terms, sectors utilising metal cutting tools remain the largest in revenue terms, however the strongest overall growth during the forecast period came from mobile robots and industrial robots, which are the only ones forecast to experience growth in 2019 versus 2018.

Tim Dawson, research director for Interact Analysis and principal analyst of the motion controls report, said: “Although the motion control market may be considered fairly mature there are important trends impacting its future growth helping drive revenues at an above average rate for the long-term. Couple that with product releases from new vendors, plus expanding portfolios from existing ones; and the fundamentals for this industry appear very strong, even despite headwinds in certain key sectors.”

Cybersecurity Zero Day Threats and Executive Survey

Cybersecurity Zero Day Threats and Executive Survey

Cybersecurity is in the news more often than violence or politics, its seems. Last week I received two important pieces of news—both reported below. The first details vulnerabilities found in VxWorks—the most widely used Real-Time Operating System forming the foundation for process control. The other news concerns a survey of executives that shows continued cyber attacks on industrial systems.

Zero Day Vulnerabilities

Enterprise IoT security company, Armis, announced the discovery of 11 zero-day vulnerabilities, 6 critical, that affect Wind River® VxWorks versions since version 6.5, that include the IPnet stack, collectively known as “URGENT/11.” Updated releases have been provided. URGENT/11 does not impact versions of the product designed for certification, such as VxWorks 653 and VxWorks Cert Edition.

VxWorks, the leading real-time operating system (RTOS), is used in more than two billion devices across industrial, medical and enterprise environments such as mission-critical systems including SCADA, elevator and industrial controllers, patient monitors and MRI machines, as well as firewalls, routers, satellite modems, VOIP phones and printers. If exploited, URGENT/11 could allow a complete takeover of the device and cause disruption on a scale similar to what resulted from the EternalBlue vulnerability.

“VxWorks is the most widely used operating system you may never have heard of,” said Ben Seri, vice president of research at Armis. “A wide variety of industries rely on VxWorks to run their critical devices in their daily operations—from healthcare to manufacturing and even security businesses. This is why URGENT/11 is so important. The potential for compromise of critical devices and equipment especially in manufacturing and healthcare is a big concern.”

URGENT/11 includes six Remote Code Execution (RCE) vulnerabilities that could give an attacker full control over a targeted device, via unauthenticated network packets. Any connected device leveraging VxWorks that includes the IPnet stack is affected by at least one of the discovered vulnerabilities. They include some devices that are located at the perimeter of organizational networks that are internet-facing such as modems, routers and firewalls. Any vulnerability in such a device may enable an attacker to breach networks directly from the internet. Devices protected by perimeter security measures also can be vulnerable once the devices create TCP connections to the internet. These connections can be hijacked and used to trigger the discovered TCP vulnerabilities, allowing attackers to take over the device and access the internal network.

“URGENT/11 could allow attackers to remotely exploit and take over mission critical devices, bypassing traditional perimeter and device security. Every business with these devices needs to ensure they are protected,” said Yevgeny Dibrov, CEO and co-founder of Armis. “The vulnerabilities in these unmanaged and IoT devices can be leveraged to manipulate data, disrupt physical world equipment, and put people’s lives at risk.”

VxWorks is pervasive and trusted due to its rigorous and high-achieving safety certifications and its high degree of reliability and real-time accuracy. In its 32-year history, only 13 Common Vulnerabilities and Exposures (CVEs) have been listed by MITRE as affecting VxWorks. Armis discovered unusually low-level vulnerabilities within the IPnet stack affecting these specific VxWorks versions released in the last 13 years, from versions 6.5 and above. These are the most severe vulnerabilities found in VxWorks to date.

The IPnet networking stack was acquired by Wind River through its acquisition of Interpeak in 2006. Prior to the acquisition, the stack was broadly licensed to and deployed by a number of real-time operating system vendors.

Wind River has been working in collaboration with Armis on this matter, and customers were notified and issued patches to address the vulnerabilities last month. To the best of both companies knowledge, there is no indication the URGENT/11 vulnerabilities have been exploited.

Organizations deploying devices with VxWorks should patch impacted devices immediately. More information can be found in the Wind River Security Alert posted on the company’s Security Center.

Operational Downtime is the Most Common Impact of IoT-Focused Cyberattacks

As connectivity in the Industrial Internet of Things (IIoT) promises to transform the manufacturing and production industry, new research by Irdeto underlines the importance of cybersecurity, revealing that 79% of manufacturing and production organizations surveyed have experienced an IoT-focused cyberattack in the past year. This finding demonstrates the importance of cybersecurity as IoT devices proliferate across the critical infrastructure of these organizations, to ensure that the potential business benefits of IoT can be realized safely.

The Irdeto Global Connected Industries Cybersecurity Survey of 220 security decision makers in organizations in this sector (700 respondents in total) found that of the organizations that were hit by an attack, operational downtime (47%), compromised customer data (35%) and compromised end-user safety (33%) were the most common impacts. These findings clearly point to a direct bearing on revenue as well as health safety challenges presented by unsecured IoT devices.

The research also suggests that these organizations are aware of where the key cybersecurity vulnerabilities exist with their infrastructure, but do not necessarily have everything they need to address them. The most prominent vulnerabilities within manufacturing and production organizations were in mobile devices and apps (46%). This was followed by the IT network (41%) and the software used by the organization (40%) – which if referring to the OT equipment software which runs of the factory floor, could be hugely problematic.

However, despite this awareness, 92% of respondents feel their organization does not have everything it needs to address cybersecurity challenges. 44% state that their organization needs to implement a more robust security strategy. This is followed by a need for additional expertise/skills within the organization to address all aspects of cybersecurity (42%) and a need for more effective cybersecurity tools (37%).

This is compounded by the finding that, in the manufacturing sector, a total of 91% of manufacturers and 96% of users of IoT devices state that the cybersecurity of the IoT devices that they manufacture or use could be improved either to a great extent or to some extent. Failure to address these challenges could prove costly with the average financial impact as a result of an IoT-focused cyberattack in the manufacturing space identified as more than $280,000 USD, according to the survey.

“While the benefits of IoT may be in abundance in manufacturing and industrial environments, this connectivity also increases the attack surface and these findings demonstrate that there is an awareness of the cybersecurity challenges and impacts within the industry, but potentially a need to rethink strategies to mitigate the impact of potential cyberattacks,” said Mark Hearn, Director of IoT Security and Business Development, Irdeto. “Whatever the nature of the threat, industrial and manufacturing organizations must understand the scope of their current risk, ask hard cybersecurity-centric questions to vendors, and work with trusted advisors to safely embrace connectivity in their manufacturing process.”

As organizations fight to keep pace with the cybersecurity challenges in the manufacturing sector, they do have several security measures in place, but have often not implemented enough layers into their security strategy. 21% of organizations surveyed do not currently have software protection technologies implemented, while 39% do not have mobile app protection implemented, despite identifying mobile devices and apps as the greatest source of vulnerabilities. In addition, only 50% make security part of the product design lifecycle process.

However, the majority of organizations that don’t already have these measures in place, state that they plan to implement them in the next year. In addition, 99% of the manufacturing organizations surveyed agree that a security solution should be an enabler of new business models, not just a cost. These findings suggest that attitudes towards IoT security are changing for the better.

“As the manufacturing industry embraces IoT technology it’s clear that there are many cybersecurity challenges that must be addressed, but the industry attitude towards cybersecurity is on the right track,” added Steeve Huin, Vice President of Strategic Partnerships, Business Development and Marketing, Irdeto. “As the scope of connected manufacturing grows, the opportunities and the risks are magnified and it is imperative that organizations upskill and implement robust cybersecurity strategies to ensure they mitigate the threat and safely take advantage of the benefits that IoT can bring.”

Veterans, Women, Youth Featured at Rockwell Automation Event

Veterans, Women, Youth Featured at Rockwell Automation Event

Rockwell has had a strong training program for many years. I took my first week-long class in 1991 or 1992. Altogether I have taken about six classes—controls, PLCs, drives, motor control centers, software. I know how intense the training can be.

Last week I posted a podcast of thoughts from Rockwell Automation’s annual series of events held the week prior to Thanksgiving. Now I’m in Spain at yet another conference and trying to get caught up on posts before I start a flurry of posts from here.

So first—training, diversity, and education.

When the company showed off some graduates of its new Academy of Advanced Manufacturing and they talked about the intensity of the three month program, memories came back.

Veterans

ManpowerGroup and Rockwell Automation celebrated the first military veterans to graduate from the Academy of Advanced Manufacturing and secure high-paying jobs in the rapidly-evolving manufacturing industry.

The 12-week program launched in August combines classroom learning with hands-on laboratory experience. Veterans are trained in Rockwell Automation’s state-of-the art facility in Mayfield Heights, Ohio for in-demand jobs in advanced manufacturing. All of the graduates have job offers and more than half have multiple job offers that significantly increase — some graduates even doubling — their previous salaries.

“This program felt like it was made just for me,” says Travis Tolbert, U.S. Navy veteran and academy graduate. “It focused on controls and automation, which is something I’ve always wanted to do, but was never able to do until now. The academy helped me take my military skills and understand how I could make them relevant for jobs outside of the Navy.”

“In recognition of Veterans Day, on behalf of Rockwell and ManpowerGroup, we thank all our veterans for their service,” said Blake Moret, CEO of Rockwell Automation. “We are honored to recognize our first military veterans to graduate the Academy of Advanced Manufacturing. We’ve seen their unique combination of core work and tech-savvy skills evolve to successfully position them for careers in the industry. We’re confident this program will help solve a challenge critical to the growth of advanced manufacturing.”

If the accomplishments and future prospects of these veterans didn’t bring a tear or two, you had to have no feelings.

Women

Rockwell Automation has been announced as a 2017 Catalyst Award winner. The Catalyst Award honors innovative organizational approaches that address the recruitment, development and advancement of women and have led to proven, measurable results.

“We are thrilled to receive this recognition from Catalyst for our Culture of Inclusion journey, demonstrating our commitment to our employees, customers and community,” said Moret. “Our people are the foundation of our company’s success, and so we must create an environment where employees can and want to do their best work every day.”

The Culture of Inclusion journey began in 2007 with senior leaders renewing their commitment to diversity, inclusion and engagement. This was in response to employee data showing that women and people of color at the company had lower retention rates than white men, and there were gaps in the levels of representation for key demographics. A driving force of this strategy is the knowledge that in order to effect sustainable change, the dominant group—in this case, white men—must be aware of the impact of their privilege, be engaged, and partner with women and underrepresented groups in a meaningful way.

Results: Between 2008 and 2016, women’s representation in the U.S. increased from 11.9% to 23.5% among vice presidents, from 14.7% to 23.2% among directors, and from 19.3% to 24.3% at the middle-manager level. At the most senior leadership levels, women’s representation doubled, increasing from 11.1% to 25.0% among the CEO’s direct reports and from 11.1% to 20.0% on the board of directors. In addition, the Rockwell Automation voluntary turnover is well below the benchmark average for women.

Youth

On the Automation Fair show floor, Jay Flores, Rockwell Automation global STEM ambassador, led me on a tour of the FIRST Robotics area and explained how Rockwell is continuing its commitment to the program.

It announced a $12M, four-year commitment to FIRST—For Inspiration and Recognition of Science and Technology—founded to inspire young people’s interest and participation in science and technology.

Over the past 10 years, Rockwell Automation has provided more than $15M of broad-based support to address the critical need to fill science, technology, engineering and math (STEM) jobs that drive innovation. Many of these jobs go unfilled because of both the lack of awareness of the kinds of high-tech jobs available and the lack of skills to qualify for today’s needs.

“Through our technology and people, we are helping to inspire the next generation of innovators to fill the talent pipeline for our customers and for our company,” said Moret. “Our strategic partnership with FIRST helps us increase our reach and visibility to STEM students around the world.”

In addition to being a global sponsor of the FIRST LEGO League program and sole sponsor of the FIRST Robotics Competition (FRC) Rockwell Automation Innovation in Control Award, nearly 200 Rockwell Automation employees around the world donate their time for the FIRST programs, and more than 300 employees volunteer for the organization in other capacities. The company also donates products integral to FIRST program games and scoring. These product donations are specifically used for the FIRST Robotics Competition playing fields and scoring systems, and they are included within the parts kits teams use to build their robots.

“This generous, multiyear commitment from Rockwell Automation will allow us to focus on the strategic aspects of our partnership while continuing to help scale our programs and expose students to a broader range of industry-leading products and applications,” said Donald E. Bossi, president, FIRST. “The company has a long, rich history of supporting FIRST.”

​​​​Motor Drives Increasingly An Enabler of IoT Says Market Intelligence Firm

Industrial Merger and Acquisition Activity

A couple of reports and studies on industrial manufacturing merger and acquisition activity have popped up recently. One came from my usual source—PwC. The other arrived from a new contact—Mergermarket.

First PwC.

The following is an analysis of Global Industrial Manufacturing deals with disclosed values greater than $50 million.

The Global Industrial Manufacturing sector closed 2016 with two strong quarters of deal activity. The deal market in the first half of 2016 was suppressed primarily due to geopolitical concerns such as Brexit, slowing growth in China, and the impending US presidential election.

Although 2016 finished strong, deal value ended down 3% and volume ended down 18% compared to 2015, principally driven by the softness in the deal market in the first half of the year.

The largest deal in 2016 was the Johnson Controls/TYCO megadeal valued at $22.7 billion, which occurred in Q1 of 2016. This drove the average deal size to $404 million from $342 million in 2015.

With two consecutive quarters of improved deal activity (both value and volume), we are optimistic 2017 will likely be a good environment for deal makers. The speculation of reduced tax rates, infrastructure investment, health care reform, and reduced government regulation in the US are positive factors for many deal makers. Further, similar to 2016, deal making in 2017 will be driven by inorganic growth strategies focused on product and service differentiation through access to new markets, customers, and technologies.

Key Trends and Highlights

  • Aggregate disclosed deal value for 2016 vs. 2015 was $91.3 billion and $93.7 billion, a 3% decrease.
  • Deal volume decreased by 18% in 2016 vs. 2015, with 226 vs. 274total deals, respectively.
  • M&A activity showed signs of continued comeback as Q4 2016 had 65 deals with a total aggregate disclosed value of $25.1 billion vs. 60 deals and $20.2 billion of aggregate disclosed value in Q3 2016.
  • The largest deals in Q4 2016 included CK Holdings intended acquisition of Japanese Calsonic Kansei Corp. for $4.5 billion and a US-based investor group’s acquisition of German Atotech BV for $3.2 billion.
  • There were three transactions exceeding $1 billion in Q4 by financial buyers with a total aggregate value of $9.2 billion, 37% of total value for the period.
  • M&A activity continues to be driven by deals in the Industrial Machinery subsector. Value increased 6% compared to 2015 and doubled compared to Q3 2016. This was the only category that recorded year-over-year growth and contributed to 59% of deal value and 41% of deal volume in 2016.
  • Asia & Oceania remains as the region with the highest M&A activity. In 2016, acquirers in the region accounted for 41% of deal value and 61% of volume.

Now Mergermarket

Mergermarket has released its Global Industrials & Chemicals M&A Trend report for 2016 (Q1-Q4). Take a look at the full report Here.

A few key findings include:

Despite a series of political shockwaves leading to market uncertainty, global Industrials & Chemicals’ M&A activity still managed to hit its highest level on Mergermarket record (2001). A total of 3,356 deals worth US$ 525.2bn makes it the most active sector based on deal count and up 11.3% in terms of deal value compared to 2015 (US$ 471.8bn)

The US continued to dominate global Industrials & Chemicals activity last year, with 832 transactions valued at US$ 207.2bn, accounting for nearly 40% of the sector’s overall value. Bayer’s headline- grabbing US$ 65.3bn takeover of Monsanto contributed almost a third of the sector’s deal value. The deal also helped Germany boost its outbound activity to US$ 142bn. Germany’s appetite for outbound deals will likely continue into 2017 as German corporates take on the Industry 4.0 challenge – a government-backed initiative to unite technology within the manufacturing industry – according to Mergermarket intelligence

Industrials & Chemicals in Europe (US$ 159.4bn, 1,404 deals) saw a 45.4% jump in terms of deal value compared to 2015 (US$ 110bn, 1,361 deals). Chinese investors in particular showed a growing appetite for Europe Industrials & Chemicals, leading to a record value of US$ 58.4bn with 55 deals. This however is expected to ease this year over protectionism concerns against Chinese buyers and domestic capital controls. As such, Chinese companies may avoid overseas acquisitions for now and focus on organic growth

Drivers

Fueled by the government-backed Industry 4.0 initiative, in an effort to advance technology in the industrial space, German corporates are expected to have an even greater influence over the Industrials & Chemicals sector this year.

Activity across Asia-Pacific (including Japan) saw a significant uptick in the automotive sector driven by an increasing willingness from Asian industry players to carve out non-core businesses, such was the case in Nissan Motor’s US$ 4.5bn disposal of auto parts maker, Calsonic Kansei, to KKR. This is again likely to play a role this year as international industry players’ show an increasing hunger to acquire technology and know-how.

The rise of Chinese M&A has also contributed to the growth despite a relative slowdown in the manufacturing sector. A race to develop technology has created fierce competition among companies bidding for European and US targets to move up the supply chain and to gain industry know-how.

As the sector’s most dominant player, the US could experience a more uncertain 2017 as the effect of president-elect, Donald Trump, still remains a large unknown. But there are positive sounds being made with suggestions he would call for comprehensive tax reform and substantial changes to trade agreements, existing regulation and immigration policy, in addition to the claim that he would like to see significant investments in infrastructure.