US water technology company Xylem Inc is nearing a deal to acquire Sensus USA Inc, a provider of advanced metering technologies to utilities, for around $1.7 billion, including debt, according to people familiar with the matter. ( GS ), acquired Sensus USA for $650 million in 2013, Reuters reported. It said there is no change to its full-year 2016 adjusted earnings outlook and expects to maintain quarterly dividend payments to shareholders.
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“The combination iof Xylem’s world-calss brands and products with Sensus’ leading-edge smart technologies will create a differentiated offering that will better meet our customers’ evolving needs, including greater energy efficiency, water conservation, and improved life-cycle costs”.
The acquisition is still subject to customary closing conditions and regulatory review, but the companies expect to close the deal in the fourth quarter. Last week, Walmart bought online retailer Jet.com for $3.3 billion. “This will be an important milestone in our strategy to move Xylem’s portfolio of solutions up the technology curve”. The company has 3,300 workers across locations in the U.S., United Kingdom, Germany, Slovakia, and China. It generated $837 million in revenue in its latest year which ended on March 31 with almost 70% of its revenues coming from the U.S.
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 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.
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Xylem stock was up $1.81 at noon to $50.26 following the announcement.
