Honeywell Pays Premium to Acquire Metering Giant Elster in $5 Billion Deal

Honeywell Pays Premium to Acquire Metering Giant Elster in $5 Billion Deal

Honeywell is buying metering giant Elster for $5.1 billion from Melrose Industries.

Melrose purchased Elster three years ago for $2.3 billion. Since then, Elster increased profits substantially, despite the substantial slowdown in metering contracts after the American Recovery and Reinvestment Act (ARRA) ended. At the end of 2014, Elster reported that profits were up two-thirds since the company was acquired by Melrose.

Elster has had some substantial wins in the past few years, including being picked as one of six providers for the first phase of an eventual rollout of 35 million meters by Frances ERDF.

Elster has also grown its footprint in Latin America. Earlier this year, it won a contract with Mexicos federal electricity company, CFE, for 300,000 meters, along with software to cut down on distribution losses and theft. Elster has also won some contracts in Brazil for electricity and water meters.

These wins, coupled with notable but not overwhelming activity in the Middle East, cannot alone account for a 120 percent three-year appreciation in the post-ARRA electric advanced metering market, said Ben Kellison, director of grid research with GTM Research. He added, This is a noteworthy acquisition, as Elster has not won any orders that drastically enhance its backlog during its time under private equity.

In North America, Elster has pivoted toward the municipal and cooperative utility market. Cities, in particular, offer the opportunity to layer on additional services as metering companies like Elster have to look beyond the meter to smart-city and internet-of-things projects.

Source: Greentech Grid

Smart Grid Bulletin February 2019

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