ITRI: Actaris Deal Good for Everyone (Especially Private Equity Investors)

Itron Inc., which provides technology to help utilities read their meters remotely, has benefitted from a strong upgrade cycle as utilities seek to cut the costs of manual meter-reading (including treatment for dog bites.) It is therefore no surprise that the company wants to expand the business abroad.
Itron to Pay $1 Billion for Actaris: Financial News – Yahoo! Finance

Itron Inc., a leading supplier of electricity meters in North America, has announced a deal to acquire Actaris Metering Systems of Europe for more than $1 billion.It also will retire some $600 million of the European company’s debt.

The acquisition will more than double the Spokane-area company’s income while expanding its reach to about 300 million Actaris electricity, gas and water meters in 30 countries, according to a news release issued Sunday.

The deal is being financed primarily with new debt, but Itron generates strong cash flow and will be adding more from Actaris, so it shouldn’t be a big problem. As a result, doubling income while increasing the share count by just 15% seems like a pretty good deal for existing shareholders.

But the best deal of all was reserved for 10 private equity investors, who were given a discount from the recent trading so as not to disrupt the market price. The $57.50 they paid (which they won’t even have to shell out until Thursday) has already yielded a 17% return.

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3 Comments on “ITRI: Actaris Deal Good for Everyone (Especially Private Equity Investors)”

  1. [...] When Itron (ITRI) announed a large sale recently, we said “make no bones about it: automatic meter reading will be a long-term upgrade cycle, and the fact that a company with a market cap under $2 billion is one of the leaders means a great long-term opportunity for the stock, despite the hiccups they are bound to face along the way.” Possibly less concerned about those hiccups are the private equity guys who provided some of the capital Itron needed for a recent acquisition. As we said at the time: The best deal of all was reserved for 10 private equity investors, who were given a discount from the recent trading so as not to disrupt the market price. The $57.50 they paid (which they won’t even have to shell out until Thursday) has already yielded a 17% return. [...]

  2. [...] Itron Completes Acquisition of Actaris Metering Systems: Financial News – Yahoo! Finance Itron, Inc. (ITRI) announced today that it has completed the acquisition of Actaris Metering Systems (Actaris) for EUR 800 million plus the retirement of debt, or $1.7 billion. Announced just six weeks ago, the deal closed in record time. As we noted at the time, the deal is being financed primarily with new debt, but Itron generates strong cash flow and will be adding more from Actaris, so it shouldn’t be a big problem. As a result, doubling income while increasing the share count by just 15% seems like a pretty good deal for existing shareholders. [...]

  3. [...] have been an owner of the market leader in smart meters, Itron (ITRI), for some time. I found the article interesting because it uncovers a potential competitor I [...]

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