* Landis+Gyr to spend more than $1 billion on takeovers
* EU regulation drives massive meter investments
* Efficiency gains, lower costs pushes rollout worldwide
* French 5 billion euro project attracts bidders
By Geert De Clercq
PARIS, May 27 Landis+Gyr, the world's biggest
maker of power meters for utilities, plans to more than double
its revenue to $4 billion through a series of takeovers as it
seeks to benefit from a global investment drive in smart meters.
Chief Operating Officer Richard Mora said the
Switzerland-based firm, which had revenue of $1.51 billion in
2013, wants to buy companies specialising in power metering and
"We aspire to be a company with $4 billion in revenue by
2020 and we will do this through organic (self-generated) growth
and acquisitions," Mora told Reuters.
He did not say how much the group plans to spend, but if
half its planned growth came from takeovers and at a modest
price/sales ratio of 1, the firm would spend more than 1 billion
dollars acquisitions. In 2011, Japan's Toshiba Corp
bought Landis+Gyr for $2.3 billion, or 1.5 times sales.
Mora said Toshiba is willing to fund further expansion.
"If there is a compelling case, they are ready and willing
to allow us to make the investments," he said.
Mora said Landis+Gyr's acquisition of unlisted optical
sensors maker PowerSense earlier this month for an undisclosed
sum was an example of the kind of acquisitions it is seeking.
Spun off by Denmark's Dong Energy A/S,
PowerSense's products allow utilities to inspect power cables
and measure things like drops in voltage. "We have the market
penetration," he said. "What we are looking to buy is
Founded in Zug, Switzerland at the end of the 19th century,
Landis+Gyr has 5,000 staff worldwide and works with over 3,500
network operators and utilities.
Long a staid business making power meters for households as
well as factories and utilities, the metering business has seen
fast growth in recent years as technological advances allow
meters to do more than just record how much power is used.
Unlike the electromechanical meters with spinning wheels
still present in many European homes, smart meters give
real-time consumption data and eliminate costly meter reading
visits. But their introduction is in many instances being held
back by discussions about who will pay - the utilities or their
Excluding China, where foreign meter-makers have limited
access, Mora estimates there are about 1 billion electric power
meters in the world - some 200 million of them in Europe, 120
million in the United States and 90 million in Japan.
Landis+Gyr claims a global market share of about 30 percent,
with 300 million metering points, of which about 25 million are
smart meters, mostly in the United States where it has 23
"We are betting that smart grids will develop in Europe, the
Middle East and Africa, in Asia-Pacific and in South America.
The opportunity is huge," Mora said.
In Europe, where a European Union directive requires 80
percent of households to have smart meters installed by 2020,
penetration stood at 22 percent at end-2013 and is expected to
rise to 60 percent by 2019, according to a Berg Insight report.
Berg estimates Europe will spend some 16 billion euros
($21.8 billion) to install 110 million of the devices between
2011 and 2017, or between 140 and 240 euros per meter.
For meter makers like Landis+Gyr, U.S.-based groups Itron
and Sensus, Germany's Elster, General Electric
and Echelon, this is the opportunity of a lifetime.
One of the biggest prizes will be France, whose government
last year approved a plan to install 35 million smart meters
between 2016 and 2020.
At about 30 euros per meter and 120 euros for installation,
the replacement of the old meters will cost EDRF - the power
distribution arm of utility EDF - more than 5 billion
euros, to be financed by productivity gains.
Following a test phase with 300,000 meters installed in the
cities of Lyon and Tours, France has opened a tender for the
first 3 million devices.
Several suppliers, including Landis+Gyr, Itron and Britain's
Iskraemeco - which supplied meters for the Lyon-Tours pilot -
are in the running. French-based Sagemcom, owned by the Carlyle
group, Elster, Siemens and Spain's ZIV may also bid.
"We are hoping for a share of that," Mora said.
($1 = 0.7325 Euros)
(Editing by David Holmes)