Energy technology company Itron is to acquire industrial internet of things company Silver Spring Networks for more than $800 million.
The two companies have signed a definitive agreement for Itron to acquire all outstanding shares of Silver Spring for $16.25 per share in cash.
The transaction is valued at approximately $830 million, net of $118 million of Silver Spring’s cash.
This represents a premium of 25 percent to Silver Spring’s closing share price on September 15, 2017, the last trading day prior to the announcement of the transaction.
The transaction has been unanimously approved by the boards of directors of both companies.
Headquartered in San Jose, California, Silver Spring provides IoT connectivity platforms and solutions to utilities and cities.
In 2016, Silver Spring generated revenues of $311 million with a gross margin of 44 percent and ended the year with $1.2 billion of backlog.
With its global footprint in the smart utility and smart city sectors, Silver Spring generated more than 20 percent of its revenues through its primarily recurring managed services and software-as-a-service solutions, an area of strategic focus for Itron.
To date, Silver Spring has delivered more than 26.7 million network-enabled devices across five continents.
Itron anticipates approximately $50 million in annualized cost synergies to be substantially realized within three years of completing the transaction by optimizing combined operations and expenses.
Philip Mezey, Itron’s president and CEO, says: “The addition of Silver Spring brings more capabilities to our offerings and advances our strategy of delivering highly secure, value-generating solutions for the critical infrastructure within utilities, smart cities and the broader industrial IoT sector.
“By converging our complementary, standards-based technologies, we will enhance customer efficiencies with solutions that optimize devices, network technologies, outcomes and analytics.
“This enables us to increase investment in new solutions and accelerate innovation for our combined customer base, covering more than 200 million people.
“This transaction also increases our presence in the sizable industrial IoT segment, driving higher growth with recurring revenues and enabling Itron to increase profitability beyond our mid-teens EBITDA margin target.
“Combining Silver Spring’s entrepreneurial culture and proven capabilities with Itron’s operational strengths, depth of solutions and customer intimacy will result in a company that is well-positioned in the fast growing critical infrastructure space.
“We look forward to welcoming Silver Spring’s talented team of engineers and professionals to Itron and are confident that together, we are best equipped to provide industry-leading solutions that will deliver greater value to our customers.”
Mike Bell, president and CEO of Silver Spring Networks, says: “Joining forces with Itron will enable us to help more utilities and cities adopt the industrial Internet, improve their performance and reliability, and better position themselves for a connected future.
“This strong combination will address end-to-end solutions for our customers and will create immediate value for our stockholders; it will also provide new opportunities for our employees as part of a larger, global technology leader for the Internet of Important Things.”
