Smart meter maker Landis+Gyr plans IPO, sale still an option

ZURICH (Reuters) - Swiss smart meter maker Landis+Gyr plans an initial public offering (IPO) in the third quarter as its owner, Japanese conglomerate Toshiba, scrambles to raise funds to cover losses at bankrupt U.S. nuclear unit Westinghouse.

FILE PHOTO - The logo of Swiss-based meter maker Landis+Gyr is seen at an office building in the Swiss town of Zug May 19, 2011. REUTERS/Arnd Wiegmann/File Photo

Under the plan, Toshiba and the Innovation Corporation Network of Japan (ICNJ) would sell their entire stakes, with the shares listed on the SIX Swiss Exchange, Landis+Gyr said on Monday.

Alternatively, Chief Executive Richard Mora said Landis+Gyr could still be sold to another company.

Last month, Reuters reported prospective bidders had narrowed to two, Goldman Sachs’s private equity arm and Canada’s Onex Corp.

“No decisions have been made with regards to either the IPO or the dual-track potential trade sale,” Mora said on a conference call.

A source familiar with the matter told Reuters than an IPO is “the more likely scenario”.

Toshiba had previously spurned a $2 billion offer to buy Landis+Gyr from CVC Capital Partners and Hitachi, Reuters has reported.

Mora declined to say how much an IPO could raise.

U.S. rival Itron, which has similar earnings before interest, tax, depreciation and amortization (EBITDA) to Landis+Gyr of just over $200 million, has a market capitalization of $2.6 billion.

Toshiba is seeking to unload assets after warning its loss for the past year would balloon due to potential legal damages over a $1.3 billion accounting scandal and an increases in its now-bankrupt U.S. nuclear unit’s liabilities.

Landis+Gyr, whose net loss in 2016/2017 widened nearly five-fold to $62.1 million, is seeking to lure investors with a self-described “attractive dividend policy”, paying at least $70 million in 2018 and 60 percent of free cash flow after that.

“We think our post-IPO shareholder return policy is attractive and sustainable,” Mora said.

There have been a wave of smart meter transactions in the last two years, including Xylem’s $1.7 billion acquisition of Sensus and Honeywell’s purchase of Melrose Industrie’s Elster unit in 2016.

Smart metering equipment helps consumers and utilities monitor and manage their consumption of electricity, gas or water.

In recent years, smart metering adoption has been stunted by lack of standards, uncertainty over whether new laws will support the technology and consumers wary of actual benefits.

UBS and Morgan Stanley are joint global coordinators and joint bookrunners. Credit Suisse and JP Morgan are also joint bookrunners, with Bank Vontobel and Mizuho co-joint bookrunners.

Reporting by John Miller and Joshua Franklin, editing by Louise Heavens