Landis+Gyr at Any Price? Smart Meters’ Second Act

Landis+Gyr is said to be on the auction block — and big smart grid suitors have come to bid. Reuters has reported that General Electric was offering $2 billion for the Swiss-based smart metering giant, an offer that was followed by Toshiba’s 200 billion yen ($2.48 billion) counter-offer, and entry by strategic bidders including Honeywell and ABB. And while some reports say GE had withdrawn its bid, I’ve heard that GE is very much still in the running.

In my weekly update at GigaOm Pro (subscription required) I get into just what each of these suitors might get out of a Landis+Gyr acquisition. First off, it’s the only one of the big five smart meter companies (the others are GE, Itron, Sensus and Elster) that’s for sale, being itself a conglomerate of networking and metering companies consolidated by Australian private equity firm Bayard Capital in 2008.

Landis+Gyr earned about $200 million on about $1.5 billion in annual revenues in the last year, Reuters’ anonymous sources report. That puts a $2 billion-plus price firmly in the realm of long-term investment. But strategic buyers could squeeze a lot more value out of L+G by integrating its existing technologies and utility projects into their own lines of business.

For example, GE’s smart meter business relies on a host of partners for communications and networking, while L+G has its own 900-megahertz communications system, as well as back-end software to manage it all. With L+G, GE could stop just churning out smart meters like widgets, and start supplying a more holistic offering to utilities.

As for Toshiba, it’s a huge player in power and grid systems, alongside Mitsubishi and Hitachi, but it hasn’t publicized much about work on smart meters. Perhaps Toshiba wants L+G’s smart metering technology to compete against partnerships like the one linking Hitachi’s grid systems with Panasonic’s in-home energy systems.

Honeywell has been been getting into sub-metering buildings and demand response via Acuacom, and has home energy gear from programmable thermostats to next-generation home energy control systems. The key bottleneck remains the smart meter-home link. I’m curious to know how interested a big end-customer system provider like Honeywell might be in integrating smart meters, customer-side energy control and data management under one roof.

As for ABB, it’s a grid giant in everything but meters, and has been buying smart grid companies like crazy in the last year. Enough said.

Image courtesy of Boris from Vienna via Creative Commons license.