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.
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The company’s strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, solid stock price performance and reasonable valuation levels. The deal is expected to close by year’s end. Sensus says that more than 80 million of its smart meters have been installed throughout the world.
Xylem (NYSE:XYL) last announced its earnings results on Tuesday, August 2nd.
Xylem operates in 150 countries providing water technologies including water pumps, treatment solutions and analytics for public, commercial and industrial, and agricultural applications.
With this acquisition, Xylem, a premium water and wastewater applications solutions company with a portfolio of products and services that address the cycle of water from collection, distribution and use, to its return to the environment, will acquire a strategically valuable asset that will accelerate its ability to bring systems intelligence solutions to customers across the water and energy industries, said Decker. Xylem declined to comment, while Sensus did not immediately respond to a request for comment.
In addition to sales to water utilities, Sensus gets almost one-fourth of its revenue from electric and gas utilities. “The projected growth rate of smart metering, particularly AMI, is even higher in these sectors than in water, and Sensus is well positioned to capture that growth with its network-enabled solutions”, Xylem said.
As with the Honeywell/Elster acquisition, Xylem bought Sensus to have a smart metering offering in emerging markets, as well as to provide complimentary products to other parts of the business. The company has 3,300 workers across locations in the U.S., United Kingdom, Germany, Slovakia, and China. Almost 70 percent of its 2016 revenues were generated in the US, according to a press release. Xylem Inc makes up approx 0.11% of Rathbone Brothers Plc’s portfolio.Checchi Capital Advisers reduced its stake in XYL by selling 29 shares or 1.89% in the most recent quarter. On average, equities analysts expect that Xylem will post $2.04 earnings per share for the current year.
The transaction is subject to customary closing conditions and regulatory review, including approval by the Federal Communications Commission of the transfer of certain spectrum licenses.
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Xylem doesn’t expect the acquisition to change its outlook for 2016, but anticipates the deal will add to its adjusted earnings in 2017.
