Cambridge Quantum Computing (CQ), a pioneer in quantum software and algorithms, announces they have entered into a definitive agreement under which Cambridge Quantum will combine with Honeywell Quantum Solutions (HQS), a Honeywell business unit and maker of the highest performing quantum computer currently available. Honeywell has been an investor in and commercial partner with Cambridge Quantum since 2019. The combination will form a new company that is extremely well-positioned to lead the quantum computing industry by offering advanced, fully integrated hardware and software solutions at an unprecedented pace, scale and level of performance to large high-growth markets worldwide. Commercializing quantum solutions The new company's combined expertise will deliver solutions to customers globally as well as spur advances that will accelerate the adoption and impact of quantum technology worldwide. "Joining together into an exciting newly combined enterprise, HQS and CQ will become a global powerhouse that will create and commercialize quantum solutions that address some of humanity's greatest challenges, while driving the development of what will become a $1 trillion industry," said Ilyas Khan, founder of CQ. "I am excited to lead a company that has the best people and technologies in the quantum computing industry and the best and boldest clients. Together we will lead the industry as it grows and matures, and create tangible, credible, provable and science-led advances." Quantum operating system The new company will have the best talent in the industry, the world's highest performing quantum computer" Honeywell's Chairman and CEO Darius Adamczyk noted, "The new company will have the best talent in the industry, the world's highest performing quantum computer, the first and most advanced quantum operating system, and comprehensive, hardware-agnostic software that will drive the future of the quantum computing industry. The new company will be extremely well positioned to create value in the near-term within the quantum computing industry by offering the critical global infrastructure needed to support the sector's explosive growth." Adamczyk added, "Since we first announced Honeywell's quantum business in 2018, we have heard from many investors who have been eager to invest directly in our leading technologies at the forefront of this exciting and dynamic industry – now, they will be able to do so. The new company will provide the best avenue for us to onboard new, diverse sources of capital at scale that will help drive rapid growth." Quantum machine learning Founded in 2014, Cambridge Quantum has assembled the industry's largest scientific team in quantum algorithms and software to achieve major advances in cybersecurity, finance, drug discovery, materials science, optimization, quantum machine learning, natural language processing, and more. Cambridge Quantum will continue its presence and expand its software and algorithm development team in the UK, with offices in Cambridge, London, and Oxford, and overseas in the USA (Washington), Germany, and Japan. CQ will operate with no change to its globally recognized brand. Honeywell began its quantum computer development program a decade ago and uses trapped-ion technology that uses charged atoms to hold quantum information. The Honeywell System Model H1 consistently achieves the highest quantum volume -- a comprehensive performance measurement used widely by the industry -- on a commercial quantum computer. Customary closing conditions Honeywell will invest between US$270million to US$300 million in the new company The new company, which will be formally named in due course, will have a long-term agreement with Honeywell to help manufacture the critical ion traps needed to power the quantum hardware. Honeywell will invest between US$270million to US$300 million in the new company. Honeywell will be the majority shareholder of the new company, and CQ's shareholders will own over 45% of the new company. The transaction has been unanimously approved by the Boards of Directors of both Cambridge Quantum and Honeywell. The deal is intended to close in Q3 this calendar year and is subject to the satisfaction of certain regulatory approvals, and other customary closing conditions. Merrill Lynch International (‘BofA Securities’) is acting as exclusive financial advisor to Cambridge Quantum, while Morrison & Foerster LLP is acting as its legal advisor. J.P. Morgan Securities LLC is acting as exclusive financial advisor to Honeywell, while Freshfields Bruckhaus Deringer LLP is acting as its legal advisor.
Honeywell announced the results of its comprehensive portfolio review, including its intention to separately spin off its Homes product portfolio and ADI global distribution business, as well as its Transportation Systems business, into two stand-alone, publicly-traded companies. The planned separation transactions are intended to be tax-free spins to Honeywell shareowners for U.S. federal income tax purposes and are expected to be completed by the end of 2018. “Today’s announcement marks the culmination of a rigorous portfolio review involving a detailed assessment of every Honeywell business. As part of that review, we analyzed numerous criteria, including growth outlook, financial performance, market dynamics, potential for disruption, and, most importantly, assessment of fit as a Honeywell business,” said Honeywell President and CEO Darius Adamczyk. High-Growth Businesses “The remaining Honeywell portfolio will consist of high-growth businesses in six attractive industrial end markets, each aligned to global mega trends including energy efficiency, infrastructure investment, urbanisation and safety. These businesses are best positioned to leverage Honeywell synergies from our technologies, financial and business models, and talent. Our simplified portfolio will offer multiple platforms for organic growth and margin expansion through further deployment of our world-class HOS Gold operating system and the Honeywell Sentience Platform. Honeywell will also have multiple levers for continuing to execute an aggressive capital deployment strategy, including a vigorous and disciplined M&A program. The spun businesses will be better positioned to maximize shareowner value through focused strategic decision making and capital allocation tailored for their end markets,” Adamczyk said. “At Honeywell, we will continue our track record of execution, delivering growth, margin expansion, and aggressive capital allocation for our shareowners.” The new Transportation Systems business willbe a global leader in turbocharger technologies HVAC Controls And Security The new Homes and Global Distribution business will be a leader in the home heating, ventilation and air conditioning (HVAC) controls and security markets, and a leading global distributor of security and fire protection products. The business is expected to have annualized revenue of approximately $4.5 billion, a high-yield credit rating, approximately 13,000 employees, and financial responsibility for certain Honeywell legacy liabilities. Transportation Systems Turbocharger Technology The new Transportation Systems business will be a global leader in turbocharger technologies with best-in-class engineering capabilities for a broad range of engine types across global automobile, truck and other vehicle markets. The business is expected to have annualized revenue of approximately $3 billion, a high-yield credit rating, approximately 6,500 employees and financial responsibility for Honeywell legacy automotive segment liabilities in an amount equal to our Bendix legacy asbestos liability. The planned separations will not require a shareowner vote. Each spin-off will be subject to finalization of the contours of the spun-off business, assurance that the separation will be tax-free to Honeywell shareowners for U.S. federal income tax purposes, finalization of the capital structure of the three corporations, the effectiveness of appropriate filings with the U.S. Securities and Exchange Commission, final approval of the Honeywell Board of Directors, and other customary matters. Anticipated Strong Third-Quarter Results Honeywell announced it anticipates strong third-quarter results. Sales are expected to be $10.1 billion, up 3% reported and up 5% organic, and earnings per share is expected to be $1.75, up 9% reported and up 16% ex-divestitures, normalized for tax at 26%, driven by strong results at its Aerospace and Performance Materials and Technologies business groups. The Company also raised the low-end of its full-year 2017 earnings per share guidance by 5 cents to a new range of $7.05 - $7.10, excluding any pension mark-to-market adjustment. The Company will hold its quarterly earnings announcement on Friday, October 20, at 9:30 a.m. EDT. New Leader For HBT Business Group Effective immediately, Gary Michel will serve as president and CEO of Honeywell’s Home and Building Technologies (HBT) strategic business group. Michel will report to Adamczyk and serve as a company officer. Michel succeeds Terrence Hahn, who will move to a leadership role reporting to Adamczyk and will help prepare the Homes and ADI businesses for the spin. "Gary is a welcomeaddition to our teamand will help Honeywell continue to be a leader in connected technologies" Michel joins Honeywell from Ingersoll-Rand Company, where he has held a series of large leadership roles over the past 32 years. Most recently, he served as senior vice president and president, Residential HVAC and Supply, which he transformed to deliver substantial improvements in revenue and market share, operating income, commercialization processes, and technology platforms. Michel has also led Ingersoll-Rand’s Club Car; Road Development - Construction Technologies; and Utility Equipment - Construction Technologies businesses. Michel has held several other roles, including executive director, Corporate Development, and general manager, Aftermarket Division, for Europe, the Middle East and Africa. Michel earned his B.S. in mechanical engineering at Virginia Tech and his M.B.A. at the University of Phoenix. “Gary has proven himself to be an innovative and energetic leader with a deep understanding of his customers and end markets and the ability to translate this knowledge into technology-differentiated offerings that bring value to customers,” Adamczyk said. “Gary is a welcome addition to our team and will help Honeywell continue to be a leader in connected technologies, building on our great positions in growing industries.” Smart Energy Business Unit Integration In addition, Honeywell’s Smart Energy business unit, previously part of HBT, will immediately be integrated into the Process Solutions unit within Honeywell Performance Materials and Technologies. Honeywell Smart Energy enables utilities and distribution companies to deploy advanced capabilities that transform operations, improve reliability and environmental sustainability, and better serve customers. Its wide array of meter offerings will complement an existing meter portfolio within Process Solutions. Honeywell’s Process Solutions unit is a pioneer in process automation control and industrial cyber-security, and a global leader in optimizing and protecting manufacturing assets in the refining, pulp and paper, industrial power generation, chemicals and petrochemicals, biofuels, pharmaceuticals, and metals, minerals and mining industries. “Both Smart Energy and Process Solutions have deep expertise in metering, large project roll-outs and software, and both can leverage the Honeywell Sentience Platform to utilize vast quantities of user data to generate new products and services that help customers operate more efficiently,” Adamczyk said. “Both businesses are project-based with opportunities for recurring revenue streams. We are excited about the combination of these two businesses, which will allow them to expand their respective capabilities and serve a broader set of customers.”
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