21 July 2003 – Utility technology company, Itron Inc., has executed an agreement to acquire Schlumberger’s Electricity Metering business (“SEM”) for a purchase price of $255m. The acquisition combines industry leaders in automatic meter reading technology (“AMR”) and electricity metering and expands Itron’s business into the North American and international electricity metering markets.
Itron’s acquisition of SEM is expected to close in the third or fourth quarter of 2003, as soon as Hart-Scott-Rodino approval is obtained and other customary closing conditions have been satisfied. Bear, Stearns & Co. Inc. acted as financial advisor to Itron and is providing committed financing for the acquisition.
“The acquisition of SEM is an attractive and complementary addition to Itron for many reasons,” said LeRoy Nosbaum, chairman and CEO of Itron. “It significantly increases the revenues, earnings and cash flow of Itron. SEM brings to Itron approximately 1,000 new employees that have built one of the world’s leading technologies in electronic metering and a very successful metering business. This combination creates exciting opportunities for extending the value of energy data to Itron and SEM customers through greater integration of data collection, management and application.”
SEM, based in Oconee, South Carolina, has been serving the electricity metering industry for over 100 years and is a leading manufacturer of meters for the North American electricity market, which includes the U.S., Canada, Mexico and the Caribbean. In North America, SEM has approximately 3,400 utility customers and an installed base of 35 million meters, representing approximately 30 per cent of all meters in use. In addition to North America, SEM sells electricity meters in Taiwan with rights to sell existing technology into other international markets opening up in 2004. SEM had revenues of $229m and EBITDA of $33m in 2002.
Nosbaum commented that technological innovation has had a significant impact on the electricity metering industry recently, creating demand for electronic “solid state” meters to replace existing electromechanical meters. “The market for electricity meters has historically been driven by recurring replacement sales and housing starts, with annual growth of around 3%,” said Nosbaum. “However, increasing interest in electronic meters with integrated AMR functionality has resulted in a growth rate of more than twice that in each of the last few years.”
SEM introduced the first electronic residential meter in 1998 and has since sold over 5 million solid state residential meters.