USA: Xylem to Acquire Sensus Smart Technologies for the Water Sector
Xylem has signed a definitive agreement to acquire Sensus for approximately $ 1.7 billion in cash.
Rye Brook/USA — Sensus, owned by investment funds affiliated with The Jordan Company and GS Capital Partners 2000, is a provider of smart meters, network technologies, and advanced data analytics services for the water, electric and gas industries. It has more than 80 million metering devices installed globally, and its FlexNet communications network technology uses licensed spectrum in the U.S. and other geographies. 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.
Sensus generated $ 837 million in adjusted revenue and $ 159 million in adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) in fiscal 2016, which ended March 31, 2016. In addition to its strong presence in the smart water sector, Sensus generates approximately 24 % of its revenues from sales to electric and gas utilities. The projected growth rate of smart metering, particularly AMI, is even higher in these sectors than in water. Sensus has approximately 3,300 employees and major locations in the U.S., United Kingdom, Germany, Slovakia, and China. Nearly 70 % of 2016 revenues were generated in the U.S.
“With Sensus, we will acquire a strategically valuable asset that will accelerate our ability to bring systems intelligence solutions to customers across the water and energy industries, establish a foundation for future growth and create significant shareholder value,” said Patrick Decker, Xylem President and Chief Executive Officer. “Sensus has a very broad product portfolio in metering and is well positioned in the advanced metering infrastructure (AMI) segment,” continued Mr. Decker. “The AMI segment is growing at nearly 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. Our expansive customer relationships will be able to extend the reach of Sensus’ products and technologies to new markets globally, particularly in emerging markets. As a combined company, we expect Xylem to grow faster and be more profitable.”
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. The transaction is expected to close in the fourth quarter of 2016.