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Hubbell to acquire Aclara for $1.1B, eyes 'end-to-end smart infrastructure'

Continuing an acquisition trend among smart grid technology suppliers, Hubbell Inc. has agreed to acquire Aclara Technologies LLC, an affiliate of private equity firm Sun Capital Partners Inc. (Unspecified Vehicle), for roughly $1.1 billion in cash, the companies announced Dec. 26.

"Aclara gives us end-to-end smart infrastructure solutions for electric, water and gas utilities," Hubbell Chairman, President and CEO David Nord said in a conference call with analysts after the proposed deal was disclosed. Targeted for completion in the first quarter of 2018, it would be the largest acquisition in Hubbell's nearly 130-year history. The Connecticut-based company plans to integrate Aclara into its power systems division, which designs, produces and sells distribution, transmission, substation and communications products.

Hubbell shares, listed on the New York Stock Exchange, touched a 52-week high, rising to over $138 per share, in afternoon trading Dec. 26.

Focused largely on North American electric utilities, Missouri-headquartered Aclara would bring its advanced metering infrastructure, or smart meters; communications networks; grid-monitoring sensors; software; and data analytics to Hubbell's existing portfolio, executives said. Aclara posted an adjusted EBITDA of $90 million on approximately $500 million in annual revenues in its 2017 fiscal year, which ended Sept. 30. The company has a backlog of more than $1 billion in addition to another $2 billion of "qualified pipeline," Gerben Bakker, Hubbell's power system division head, said on the call.

With $3.5 billion of company-wide revenues in 2016, Hubbell generated power division net sales of $297 million in the third quarter of 2017, an increase of 9% from a year earlier. Hubbell expects diluted earnings per share in 2017 of $5.40 to $5.50.

The planned transaction follows several other deals involving smart grid technology suppliers in 2017. In September, Itron Inc. said it would acquire smaller smart grid technology rival Silver Spring Networks Inc. for $830 million. Aclara also has been active, acquiring General Electric Philippines Meter and Instrument Co. Inc. in August and the smart grid division of Apex CoVantage LLC in January.

Smart grid product suppliers are eyeing a growing global market for digital technologies in the power sector. Bloomberg New Energy Finance in a recent report forecast that the market for smart meters would rise to $26 billion by 2025, from an estimated $18 billion this year, with the market for distribution automation growing to $10 billion, from $4 billion in 2017.