May 17, 2011 / 4:11 AM / 8 years ago

Toshiba close to deal to buy Landis+Gyr: source

TOKYO (Reuters) - Toshiba Corp (6502.T) is near to closing a deal to buy Swiss-based meter maker Landis+Gyr for about 200 billion yen ($2.5 billion), an industry source said on Tuesday, a move expected to help the Japanese electronics firm’s overseas foray into the promising smart grid market.

A view shows Toshiba Corp's logo at the fourth International Photovoltaic Power Generation (PV) Expo in Tokyo March 2, 2011. REUTERS/Yuriko Nakao

It also comes at a time when the radiation crisis at the Fukushima nuclear plant in northeast Japan has dealt a blow to Toshiba and its rivals, which had bet on nuclear power as one of their growth drivers in power generation systems business.

Governments and utilities worldwide are planning to spend billions of dollars to build so-called smart grids, installing computers and sensors at power plants, substations and along power lines to better manage the flow of electricity.

Landis+Gyr is a maker of smart meters, a key component of smart grids, and competes with companies such as Itron Inc (ITRI.O) and EnerNoc Inc <ENOC.O,>.

“What’s going on at Fukushima has created uncertainty over prospects for the nuclear business, so it’s positive that Toshiba is making moves to strengthen its transmission and distribution business,” said Masao Banba, an analyst at SMBC Friend Research Center.

“In this T&D (transmission and distribution) business we can expect both replacement demand in developed countries and new demand in emerging markets,” he said.

Toshiba in the past unsuccessfully tried to make a big foray into overseas transmission and distribution markets through an acquisition. In 2009 it put in a bid of about 500 billion yen in an auction for French firm Areva’s CEPFi.PA T&D business.

LANDIS+GYR

Landis+Gyr is owned by several investors including Bayard Capital of Australia, after been through a series of different owners including Kohlberg Kravis Roberts & Co (KKR.N) and Siemens (SIEGn.DE) in the 1990s and early 2000s.

Toshiba won the right to negotiate with Bayard Capital after two rounds of bidding, said the source, who was not authorized to talk about the matter publicly.

A Toshiba spokesman declined to comment.

The Japanese electronics conglomerate beat out two private equity firms — TPG Capital and EQT Partners — in the auction, Bloomberg reported last week.

Landis+Gyr hired Credit Suisse CSGN.VX and Lazard Ltd (LAZ.N) to advise on the potential sale of the company, people familiar with the matter told Reuters in February.

Advanced meters allow households to more closely monitor electricity usage while also sending data back to providers, which helps them manage power supply more efficiently.

Landis+Gyr, which competes with companies such as Itron Inc (ITRI.O) and EnerNoc Inc ENOC.O, has around $200 million in annual earnings before interest, tax, depreciation and amortization (EBITDA) on roughly $1.5 billion in annual revenues, according to Reuters sources.

($1 = 80.795 Japanese Yen)

Editing by Michael Watson

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