Proving the Business Case for the Internet of Things

Echelon sells smart grid business to Austria's S&T

Iain Morris
August 26, 2014
 
M2M player Echelon has agreed a sale of its smart grid business to Austrian smart energy company S&T, saying the deal will allow it to focus on its core Internet of Things (IoT) interests.

Under the terms of the deal, S&T (Linz, Austria) will pay Echelon (San Jose, CA, USA) an upfront fee of around $5 million, depending on the precise value of the net assets at the time of the transaction.

Echelon says that after fees, expenses and restructuring charges are taken into consideration the net benefit will be “nominal”.

The agreement will also see Echelon become a supplier of power-line communications chips to S&T for use in smart metering and related products.

Echelon is to receive a share of revenues from the sale of these products as well as rental income and a potential performance-based consideration of up to $1 million.

It will also transfer 60 of its current employees to S&T.

Although the deal has yet to secure regulatory approval, the companies expect it to close by the end of the year.

“This transaction will allow us to focus fully on becoming a key enabler in the transition to the industrial IoT, with the confidence of knowing that S&T will continue to operate our grid business and support our customers, partners and sales pipeline,” said Ron Sege, the chairman and chief executive of Echelon.

“With the closing of this agreement, we can turn our attention to developing, marketing and selling our industry-leading, open-interoperable control networking platform for the industrial IoT – especially bringing the benefits of IP-based converged control systems to building automation, outdoor lighting and indoor lighting applications worldwide,” he added.

S&T said the acquisition of Echelon’s grid business would allow it to expand its smart energy capabilities.

“Utilities favor end-to-end offerings from proven vendors with the experience, assets and people required to successfully deliver grid modernization solutions,” said Hannes Niederhauser, S&T’s chief executive. “We look forward to combining Echelon’s successful Networked Energy Services (NES) platform offerings with S&T’s software, system integration and project delivery capabilities, to serve smart energy customers throughout Europe and beyond.”
 
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