Proving the Business Case for the Internet of Things

Hubbell to buy Aclara for $1.1bn

Steve Rogerson
January 3, 2018
 
Hubbell is to acquire smart metering company Aclara Technologies, an affiliate of Sun Capital Partners, for approximately $1.1bn.
 
The transaction should strengthen and broadens Connecticut-based electrical manufacturer Hubbell Power Systems’ position across utility markets. The plan is to integrate Aclara’s customer relationships and smart infrastructure products into the Hubbell portfolio and accelerate innovation efforts to address utility customer demand for data and integration.
 
Aclara offers advanced metering infrastructure, meters and edge devices, software, and installation services. These products and services provide utilities visibility into their distribution networks, optimise network performance and help them engage with their customers.
 
With approximately 1200 people working with more than 800 electric, water and gas utilities worldwide, Aclara provides actionable insights to help utilities predict, plan and respond to conditions, improve operational efficiency and promote resource conservation to customers. Aclara reported revenues of $500m and adjusted EBITDA of $90m for the year ended September 2017.
 
“This is an exciting transaction that is consistent with our long-standing acquisition strategy,” said David Nord, Hubbell chief executive officer. “Aclara participates in attractive markets that complement our core with high quality products and talented people. Together with Aclara, Hubbell will be even better positioned to serve customers through a differentiated smart grid and expanded portfolio.”
 
Hubbell Power Systems has a history of integrating acquisitions under Gerben Bakker’s leadership.
 
“We both look forward to welcoming our new colleagues,” said Nord. “We have long admired the position of Aclara’s businesses in the industry, and are confident that integrating Aclara’s capabilities with Hubbell’s will allow us to deliver increased value to customers and shareholders.”
 
The addition of Aclara’s software and analytics, along with its communications networks, to Hubbell’s performance-critical components should provide for a broader set of utilities to meet their next-generation needs. Aclara’s advanced metering and grid monitoring sensor technology, as well as its software enabled installation services, will expand Hubbell’s presence in utility automation, and should allow Hubbell to deliver an end-to-end service to its customers.
 
“We are delighted to join a company with Hubbell’s resources, alliance relationships with major utilities and shared commitment to quality and innovation,” said Allan Connolly, CEO of Missouri-based Aclara. “Aclara appreciates the support Sun Capital provided to establish us as a world leading provider of end-to-end, smart infrastructure for electric, water and gas utilities. We look forward to our future with Hubbell and all that we will achieve together.”
 
The transaction is expected to be accretive in 2018 to Hubbell’s diluted EPS, excluding intangible amortisation and deal related costs, and in 2019 on a GAAP basis. Further, Hubbell expects to maintain an investment grade rating.
 
Hubbell has obtained fully committed bridge financing from JP Morgan Securities, BofA Merrill Lynch and HSBC Securities. Hubbell’s expects its debt-to-adjusted EBITDA ratio to be 3.1x at the close of the transaction, and anticipates reducing this ratio over the next few years.
 
The transaction, which is expected to be completed in the first quarter of this year, is subject to the satisfaction of customary closing conditions, including US antitrust clearance.
 
JP Morgan Securities is serving as financial advisor to Hubbell, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel. Morgan Stanley and Stephens Inc are acting as financial advisors to Aclara, and Morgan, Lewis & Bockius is serving as legal counsel.
 
Aclara is a supplier of smart infrastructure to water, gas and electric utilities globally. Its offerings include smart meters and other field devices, advanced metering infrastructure and software and services that enable utilities to predict and respond to conditions, leverage their distribution networks effectively and engage with their customers.
 
Hubbell is a manufacturer of electrical and electronic products for non-residential and residential construction, industrial and utility applications. With 2016 revenues of $3.5bn, Hubbell operates manufacturing facilities in the USA and around the world. The corporate headquarters is in Shelton, Connecticut.