Bottom Line: Drop the dinosaur

HONEYWELL of the US, which vies with Fisher-Rosemount for leadership of the world market for process control systems, got a nasty surprise after Siebe bought the smaller Foxboro controls company for dollars 656m ( pounds 437m) in the summer of 1990.

Siebe proceeded to galvanise Foxboro, transforming a somewhat academic operation, stuffed with PhDs, into a commercial, go-getting thorn in the side of Honeywell as it scorched over its previously sacred turf.

An aggressive advertising campaign incensed Honeywell. Foxboro's campaign depicted the rest of the industry as lumbering dinosaurs heading for extinction. Honeywell responded with some unflattering descriptions of Foxboro in its sales training material.

Litigation resulted but both sides have now desisted. Quite why Honeywell was worried was underlined by yesterday's news that Foxboro had landed pounds 36m worth of contracts for its products. With the US recovering, forecasts for 1994/5 suggest Siebe is on a p/e of only 15 at 588p, leaving scope for further outperformance.