Rye Brook-based Xylem Inc., an international water technology company, announced on Aug. 15 that it has signed an agreement to buy Sensus, a provider of water-metering technologies, for $1.7 billion in cash.
Sensus, with headquarters in Raleigh, N.C., has more than 80 million metering devices installed worldwide. The company is a provider of network technologies and advanced data analytics services for the water, electric and gas industries.
Patrick Decker, Xylem president and CEO, said in a statement: “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.”
Xylem was spun off by ITT Corp, in the fall of 2011 as a publicly traded company along with Exelis Inc., ITT’s defense and information solutions business.
Xylem had 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, according to a press release.
Xylem said it would finance the all-cash transaction with approximately $400 million of its non-U.S. cash, new and existing credit facilities and a combination of short- and long-term debt. It said there is no change to its full-year 2016 adjusted earnings outlook and expects to maintain quarterly dividend payments to shareholders.
Pending regulatory review, the transaction is expected to close in the fourth quarter of 2016.
Sensus had $837 million in adjusted revenue and $159 million in adjusted earnings before interest, taxes, depreciation and amortization in fiscal 2016, which ended March 31. The company has 3,300 workers across locations in the U.S., United Kingdom, Germany, Slovakia, and China. Nearly 70 percent of its 2016 revenues were generated in the U.S., according to a press release.
In addition to the smart water sector, Sensus generates about 24 percent of its revenues from sales to electric and gas utilities. “The projected growth rate of smart metering, particularly advanced metering infrastructure (AMI), is even higher in these sectors than in water, and Sensus is well positioned to capture that growth with its network-enabled solutions,” according to a press release.
“Sensus has a very broad product portfolio in metering and is well positioned in the AMI segment,” Decker said. “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.”
Xylem said it expects to achieve at least $50 million in annual cost synergies to be substantially realized within three years of closing.
Following the announcement, Xylem stock closed the day up $1.87 at $50.26.