Toshiba signs $2.3bn deal to take control of O'Reilly's firm Landis+Gyr
Owners to share in payout for stakes as energy giant agrees to buy world's biggest producer of smart-grid technologies
Published 20/05/2011 | 05:00
JAPANESE energy and technology giant Toshiba has agreed a $2.3bn deal to buy Irish investor Cameron O'Reilly's smart-metering company Landis+Gyr.
Switzerland-based Landis+ Gyr is the world's biggest developer and producer of smart-grid technologies, with a 36pc share of the global smart-grid market.
Outgoing CEO Mr O'Reilly and Sir Anthony O'Reilly are among the owners who will share in the $2.3bn (€1.6bn) payout for their stakes, after debts are paid down.
Smart-grid systems monitor electricity usage, giving customers and grid operators greater knowledge and control over how the power is being used. Landis+Gyr develops, sells and installs the metering hardware and software and manages and maintains systems once they are in place.
Its biggest single shareholder is New South Wales Superannuation Trust -- a large Australian pension fund that has a 23pc stake in the business.
The Japanese company is paying more than 10 times' earnings for Landis+Gyr. It compares with valuations of around eight times' earnings for publicly listed rivals Elster and Itron. Toshiba secured the deal after seeing off competing interest from US private equity firm TPG and Sweden's EQT.
The pricing tension was further heightened by plans for a possible flotation on the New York Stock Exchange that ran parallel to the auction process.
Landis+Gyr generated earnings before interest, taxes, depreciation and amortisation of $215m in the 12 months to the end of March.
Although Toshiba towers over the new acquisition in overall size, the deal gives it access to 30 markets where Landis+Gyr is already active.
In Ireland, Bord Gais and the ESB use the company's technology.
Toshiba expects the smart grid market to grow six-fold to $71bn over the next 10 years.
The Japanese company is already involved in everything from power generation to producing consumer electronics, making it uniquely well placed to benefit from the deal.
Last night Cameron O'Reilly told the Irish Independent that the company was the "best positioned" when the sector took off, with a 36pc market share compared with 18pc for the nearest rival.
"Our research and development budget is one of the highest in the industry with 800 people working on R&D because we took the view that smart metering's time would come and we'd have to be able to pull it all together when it did," he said.
The takeover is expected to be complete before September 30. The cash deal means that all of Landis+Gyr's investors are exiting the business and receiving cash.
"We've taken the business to this stage. The next stage in the game is to take the smart metering system and integrate it into the smart community, that's where Toshiba comes in," he added.
Mr O'Reilly has stepped down as CEO following the announcement, but will stay on as deputy executive chairman until the deal is complete.
He is being replaced as CEO by chief operating officer Andreas Umbach.
Credit Suisse and Lazard led the sale process of Landis+Gyr to Toshiba.
Deutsche Bank and Goldman Sachs co-advised Landis+Gyr shareholders on various liquidity alternatives.
Mr O'Reilly is the son of Sir Anthony O'Reilly and brother of Gavin O'Reilly, the CEO of Independent News and Media -- the owner of this newspaper.
For Toshiba, it's the biggest takeover since it bought nuclear technology company Westinghouse Electric five years ago. (Additional reporting Bloomberg)