General Electric (GE.N) is among the bidders for Switzerland-based smart metering company Landis+Gyr in an auction that could fetch as much as $2 billion, four people familiar with the matter said. Landis+Gyr, based in the Swiss city of Zug, has also drawn initial bids from several private equity firms as the auction has advanced to the second round, those people said. However, some buyout firms' interest has cooled because of a difference of opinion between them and the seller on valuation, these people said. Landis+Gyr, which makes advanced, or "smart" meters used for measuring power and other energy use, has hired Credit Suisse (CSGN.VX) and Lazard Ltd (LAZ.N) to advise on a potential sale of the company, people familiar with the matter told Reuters on February 17. Landis+Gyr, which competes with companies such as Itron Inc (ITRI.O) and EnerNoc Inc (ENOC.O), has about $200 million in annual earnings before interest, tax, depreciation and amortization (EBITDA) on roughly $1.5 billion in annual revenues, these people said. The company could be sold for about 10 times EBITDA, suggesting a sale price of roughly $2 billion, the people said. For comparison, Itron trades at roughly 8 times EBITDA. Credit Suisse has offered potential buyers staple financing - financing offered by a bank which is advising the seller - a third source said. Advanced meters allow households to more closely monitor their usage while also sending data back to their power providers, helping them manage power supply more efficiently and lower energy costs.
GE has said it plans to quickly expand its presence in the market for smart-grid electrical systems. It is not clear if there is any other strategic bidder still involved in the process. Buyout firms have been outbid in auctions for companies by so-called strategic bidders - companies in the same sector as the target - which are flush with cash and can pay more as they can extract cost savings from merging assets. All sources asked not to be identified because the auction is not public. Representatives for GE, Credit Suisse and Lazard declined to comment. Landis+Gyr spokesperson Stan March said the company does not comment on market rumor and speculation. Landis+Gyr is owned by several investors including Bayard Capital of Australia after going through a series of different owners including Kohlberg Kravis Roberts & Co (KKR.N) and Siemens (SIEGn.DE) in the 1990s and early 2000s.
(Reporting by Soyoung Kim and Megan Davies, additional reporting by Michael Erman, Matt Daily and Scott Malone. Editing by Robert MacMillan)
