Water treatment firm Xylem to pay $1.7 billion for metering provider Sensus

Sensus which had $837 million in revenue and $159 million in EBITDA in its last fiscal year is to be acquired by Xylem. Xylem Inc. (NYSE:XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, announced that it has signed a definitive agreement to acquire Sensus for approximately $1.7 billion in cash.

Sensus, based in Raleigh, North Carolina, is a supplier of smart metering and related communications systems to the water, gas, heat and electric utility sectors. It is owned by investment funds affiliated with The Jordan Company and GS Capital Partners 2000. It has more than 80 million metering devices installed globally, and its distinctive FlexNet® communications network technology uses licensed spectrum in the U.S. and other geographies and provides secure connectivity solutions that support multiple applications. The sale price is 10.7x Sensus’ adjusted EBITDA, and Xylem expects at least $50 million in annual synergies starting in 2017. The acquisition is expected to close by the end of this year.

Xylem operates in 150 countries providing water technologies including water pumps, treatment solutions, and analytics for public, commercial and industrial, and agricultural applications. In 2015, the company had revenue of $3.7 billion. The acquisition would make Xylem a major player in the market for smart meters, at a time when regulatory requirements and a drive for savings are pushing both companies and consumers to control their water and energy consumption more tightly.

As with the Honeywell/Elster acquisition, Xylem bought Sensus to have a smart metering offering in emerging markets, as well as to provide complementary products to other parts of the business. For Honeywell and Elster, their gas businesses were complementary, whereas Sensus and Xylem have overlap in water markets. The past five years have shown that it is very difficult for metering companies to compete on their own. The acquisitions began in 2011, when Toshiba paid $2.3 billion for Landis+Gyr. And sometimes, even as part of a larger conglomerate, they’re still not attractive. Aclara purchased General Electric’s electric-metering business in late 2015, even as GE was about to close the largest smart metering contract in years in North America with Consolidated Edison.

Sensus, apart from metering solutions for water and energy, also has VantagePoint™ Lighting Control solution in it’s portfolio which provides remote monitoring and control facility for street lights improving safety as well as saving energy. It also allows law enforcement agencies to control street lights from their vehicles. Sensus uses the FlexNet® communication network, the powerful long-range radio system at the heart of it’s AMI solutions for Smart Water, Smart Energy Networks, Smart Places and Smart City solutions.

Although Sensus does not seem to have direct presence in India yet, Xylem has multiple offices across the country with a India specific website as well at www.xylemindia.in/

About Xylem

Xylem (XYL) is a leading global water technology provider, enabling customers to transport, treat, test and efficiently use water in public utility, residential and commercial building services, industrial and agricultural settings. The Company does business in more than 150 countries through a number of market-leading product brands, and its people bring broad applications expertise with a strong focus on finding local solutions to the world’s most challenging water and wastewater problems. Xylem is headquartered in Rye Brook, New York, with 2015 revenue of $3.7 billion and more than 12,500 employees worldwide. Xylem was named to the Dow Jones Sustainability Index, North America for the last four years for advancing sustainable business practices and solutions worldwide, and the Company has satisfied the requirements to be a constituent of the FTSE4Good Index Series each year since 2013.

The name Xylem is derived from classical Greek and is the tissue that transports water in plants, highlighting the engineering efficiency of our water-centric business by linking it with the best water transportation of all – that which occurs in nature. For more information, please visit us at www.xylem.com.

Reference Links:

1) http://businesswireindia.com/news/news-details/xylem-inc-acquire-sensus-global-leader-smart-meters-network-technologies-advanced-data-analytics-solutions-water-industry-usd-1-7-billion-cash/49742

2) http://www.greentechmedia.com/articles/read/water-company-xylem-buys-sensus-for-1.7b

3) http://www.reuters.com/article/us-sensus-m-a-xylem-exclusive-idUSKCN10Q0C4

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