Itron and Silver Spring Networks (SSN) have signed a definitive agreement for Itron to acquire SSN. The transaction is valued at approximately $830 million.
The transaction has been unanimously approved by the boards of directors of both companies. Headquartered in San Jose, California, Silver Spring provides 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.
To date, SSN has delivered more than 26.7 million network-enabled devices across five continents, and with its global footprint in the smart utility and smart city sectors, the company generated more than 20 percent of its revenues through its primarily recurring managed services and SaaS solutions, an area of strategic focus for Itron.
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. The acquisition is expected to have a positive impact on Itron’s long-term growth rate, be accretive to gross margin in the first year after completing the transaction.
“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 chief executive officer. “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.”
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.”
Silver Spring Networks’ customers include Baltimore Gas & Electric, CitiPower & Powercor, ComEd, Consolidated Edison, CPS Energy, Florida Power & Light, Pacific Gas & Electric, Pepco Holding. Itron provides solutions across electricity, gas, water and thermal energy measurement devices and control technology; communications systems; software; as well as managed and consulting services, and has thousands of employees supporting nearly 8,000 customers in more than 100 countries.
The full press release is available at this link.