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Sources say $2 Billion Sale of Landis+Gyr Beiong Prepared by Japan’s Toshiba: Reuters

Sources say $2 Billion Sale of Landis+Gyr Beiong Prepared by Japan’s Toshiba: Reuters
In the hope and aim to rake in capital after a major writedown on its U.S. nuclear unit last month, Japan's Toshiba Corpis preparing a potential $2 billion divestment of smart meter group Landis+Gyr, reported the international news agency Reuters quoting three people familiar with the matter.
The report quoted the sources saying that a potential sale or initial public offering of the Swiss-based business could take place as early as after the European summer and the Japanese business conglomerate has hired UBS to explore both the possibilities of a sale and an IPO.
While the UBS did not provide any comment to the Reuters’ report, Toshiba said in a statement that the company "is consequently studying all options to strengthen profitability and its capital base, but no decisions have been made in respect of selling stakes or IPO of individual businesses."
In recent years, there has been a technological shift in the energy industry as the industry has gone digital and now depends on live consumption data to a much greater extent and the significance of that is highlighted by the fact that smart meter makers have seen a wave of M&A activity with three major manufacturers up for sale in Germany alone.
While being active in over 30 countries and employing more than 5,700 staff, one such company is Landis+Gyr in which Toshiba owns a 60 percent stake. Last week the company said that it was "unaffected by Toshiba's challenges" and claimed that in the fiscal year ending this month,, the company’s sales would grow by nearly 5 percent to reach a figure of $1.64 billion.
Toshiba was forced to seek divestments to create a buffer for any fresh financial problems after its shareholder equity was wiped out following the announcement by Toshiba of a $6.3 billion writedown on its U.S. nuclear business last month.
Reuters reported, quoting one of the sources said, adding that industrial conglomerates were not expected to enter the fray, that as potential buyers of Landis+Gyr, the company is expected to approach buyout groups including CVC, Cinven, Advent, KKR, Blackstone, Onex and Clayton, Dubilier & Rice.
Jointly with state-backed Innovation Network Corporation of Japan (INCJ), which holds the remaining 40 percent in the company, Toshiba bought Landis+Gyr in 2011 for $2.3 billion.
In line with the 10.7 times that U.S. water technology company Xylem paid for Sensus USA Inc last year, the deal would value Landis+Gyr at 10-11 times its annual core earnings (EBITDA), two of the people sources were quoted by Reuters as informing.
With the hope to reach EBITDA multiples similar to those of Geberit, Sulzer or Belimo, which trade at between 12-19 times, Toshiba will try to position Landis+Gyr as a Swiss industrial group.

Christopher J. Mitchell

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