Water technology provider Xylem has agreed to acquire smart meter company Sensus for about $1.7bn.
Advertisement
Water technology company Xylem has struck a deal to acquire Sensus, which is owned by investment funds affiliated with The Jordan Company and GS Capital Partners 2000. Sensus says that more than 80 million of its smart meters have been installed throughout the world.
The Sensus purchase continues a recent string of billion-dollar tech purchases that have occurred over the summer. The company generated $837m in adjusted revenue in the financial year ended 31 March 2016. Xylem expects to achieve at least $50 million in annual cost synergies to be substantially realized within three years of closing as Xylem extends its proven global procurement and continuous improvement initiatives into this business, with significant additional revenue synergy potential.
“The AMI segment is growing at almost twice the rate of the total metering space, driven in part by regulations and customers’ growing need for real-time data and reduced operational costs”, Xylem President and CEO Patrick Decker said in a prepared statement.
In addition to sales to water utilities, Sensus gets almost one-fourth of its revenue from electric and gas utilities. Sensus, based in Raleigh, NC, sells to utilities hardware and software used for so-called advanced metering infrastructure (AMI), utility industry-speak for technologies that enable two-way communication between a meter and the utility company. The company believes the acquisition would provide a foundation for future growth besides creating value.
In its acquisition of Sensus, Xylem is also adding its 3,300 employees located in the U.S., United Kingdom, Germany, Slovakia, and China.
“We anticipate accelerating our delivery of innovative solutions to our customers, particularly in the area of advanced analytics across the water, wastewater and outdoor water sectors”, Decker said. Almost 70 percent of its 2016 revenues were generated in the US, according to a press release.
Xylem said it would finance the all-cash transaction with approximately $400 million of its non-U.S. cash, new and existing credit facilities and a combination of short- and long-term debt. There is no change to Xylem’s full-year 2016 adjusted earnings outlook. BlackRock Institutional Trust Company N.A. boosted its position in Xylem by 8.6% in the first quarter.
Advertisement
Xylem, which manufactures equipment used in water and wastewater applications, reaffirmed its 2016 earnings forecast and said it expects the deal to add to its adjusted earnings in 2017.
