Reuters cites unnamed sources who say smart meter giant Sensus is seeking a buyer. Will it follow fellow meter giant Landis+Gyr into the arms of a corporate parent?
Could smart meter giant Sensus be for sale? That’s what Reuters reported late Thursday night, citing two unnamed sources who said Sensus has hired Credit Suisse to find a strategic buyer or private equity firm willing to pay $800 million to $1 billion for the Raleigh, N.C. metering company.
If true, that would be big news in the small world of the global smart meter giants. A Sensus sale could start a smart grid bidding war, like the one that ended in rival smart meter giant Landis+Gyr’s $2.3 billion sale to Toshiba earlier this year. But then again, with a sizeable debt load and sliding sales, Sensus might not be as attractive an acquisition target as its rival.
Sensus is one of five companies — the others are Itron, General Electric, Elster and Landis+Gyr — that dominate today’s smart meter market, and held about 21 percent of U.S. smart meter market share as of last fall, in third place behind L+G and Itron. Reuters’ unnamed sources said that Sensus was seeking a valuation of 8 to 10 times its $100 million in earnings before interest, tax, depreciation and amortization (EBITDA), and was expecting interest from both strategic buyers and private equity firms. Both Sensus and Credit Suisse declined to comment on the report.
What might a potential buyer be getting? Although Sensus is privately held, the company has filed financial reports to the Securities and Exchange Commission because it had issued publicly traded debt. According to those reports, the company has seen net losses of $8.3 million in fiscal year 2008, $18.4 million in FY 2009 and $7.5 million in FY 2010, although its sales from continuing operations have risen steadily over that time, from $722 million in FY 2008 to $866 million in FY 2010.
In May of this year, Sensus landed a $675 million credit facility that allowed it to purchase $275 million in existing 2013 company notes, thus closing its SEC reporting obligations. But an April filing prior to that deal revealed that Sensus was carrying a total debt of $451 million and had $38 million cash on hand as of March 31. In other words, as the company said in its 2010 annual report, “We are highly leveraged and have significant debt service obligations,” and any potential buyer would presumably have to deal with that debt.
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