Itron, a company that offers energy and water resource management services, has agreed to acquire Silver Spring Networks.
Silver Spring Networks offers Internet of Things connectivity and platform solutions to cities and utilities under the company’s Internet of Important Things™ platform, its brand of Industrial Internet of Things services.
Silver Spring Networks has previously partnered with lighting company Acuity Brands on the development of an intelligent lighting platform for municipalities and large operators. (Ref: Article).
Itron plans to use the acquisition to accelerate Smart Grid and Smart City Innovation, and Itron points out that the acquisition improves capabilities that boost efficiency for smart cities, utilities, and enterprises
Under the newly signed acquisition merger agreement, Itron will acquire all outstanding shares of Silver Spring for $16.25 per share in cash. This price will offer a 25 percent premium over the Silver Spring’s closing share price on September 15, 2017, the last day of trading before the announced acquisition. Itron intends to finance the transaction using a combination of cash and about $750 million in incremental new debt. Wells Fargo has provided fully committed financing.
The combined company intends to bring together the best of both companies’ complementary technologies to deliver streamlined solutions on standards-based platforms. The newly combined company expects that the merger will allow it to optimize industrial networks and offer more solutions that enhance value for customers.
Silver Spring Acquisition to Generate Recurring Revenue Opportunity in Software and Services Segment
Itron points out that it values an open platform approach to industry partners, and it is committed to promoting multi-vendor offerings for the smart utility and smart city sectors. According to Itron, which has so far deployed more than 90 million smart endpoints globally from its customer bases, the acquisition will let the company offer customers more outcome-based solutions, producing a large, recurring revenue opportunity in the software and services segment.
“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,” said Philip Mezey, Itron’s president and CEO. “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.
Mike Bell, president and chief executive officer of Silver Spring Networks, said, “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.”
The boards of directors of both companies have unanimously approved the transaction. Close of the transaction is expected for late 2017 or early 2018 and is subject to customary closing conditions, including the approval of Silver Spring’s stockholders and regulatory approval.