Advances strategy to provide value-added services and outcomes-based
solutions
Enhances capabilities that increase efficiency for utilities, smart
cities and enterprises
Accretive to non-GAAP EPS and adjusted EBITDA in 2019
Itron to host webcast today at 8:30 a.m. EDT to discuss the
transaction
LIBERTY LAKE, Wash. & SAN JOSE, Calif.--(BUSINESS WIRE)--
Itron, Inc. (NASDAQ: ITRI) and Silver Spring Networks, Inc. (NYSE: SSNI)
today announced that they have signed a definitive agreement for Itron
to acquire all outstanding shares of Silver Spring for $16.25 per share
in cash. The transaction is valued at approximately $830 million, net of
$118 million of Silver Spring's cash. This represents a premium of 25
percent to Silver Spring's closing share price on Sept. 15, 2017, the
last trading day prior to the announcement of the transaction. The
transaction has been unanimously approved by the boards of directors of
both companies.
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Headquartered in San Jose, California, Silver Spring provides Internet
of Important Things™ connectivity platforms and solutions to utilities
and cities. In 2016, Silver Spring generated revenues of $311 million
with a gross margin of 44 percent and ended the year with $1.2 billion
of backlog. With its global footprint in the smart utility and smart
city sectors, Silver Spring generated more than 20 percent of its
revenues through its primarily recurring managed services and SaaS
solutions, an area of strategic focus for Itron. To date, Silver Spring
has delivered more than 26.7 million network-enabled devices across five
continents.
Itron anticipates approximately $50 million in annualized cost synergies
to be substantially realized within three years of completing the
transaction by optimizing combined operations and expenses. The
acquisition is expected to have a positive impact on Itron's long-term
growth rate, be accretive to gross margin in the first year after
completing the transaction and be accretive to non-GAAP EPS and adjusted
EBITDA in the second year, excluding one-time, transaction-related costs
and including stock-based compensation costs that Silver Spring
currently excludes from its reported non-GAAP results.
"The addition of Silver Spring brings more capabilities to our offerings
and advances our strategy of delivering highly secure, value-generating
solutions for the critical infrastructure within utilities, smart cities
and the broader industrial IoT sector," said Philip Mezey, Itron's
president and chief executive officer. "By converging our complementary,
standards-based technologies, we will enhance customer efficiencies with
solutions that optimize devices, network technologies, outcomes and
analytics. This enables us to increase investment in new solutions and
accelerate innovation for our combined customer base, covering more than
200 million people.
"This transaction also increases our presence in the sizable industrial
IoT segment, driving higher growth with recurring revenues and enabling
Itron to increase profitability beyond our mid-teens EBITDA margin
target," continued Mezey. "Combining Silver Spring's entrepreneurial
culture and proven capabilities with Itron's operational strengths,
depth of solutions and customer intimacy will result in a company that
is well-positioned in the fast growing critical infrastructure space. We
look forward to welcoming Silver Spring's talented team of engineers and
professionals to Itron and are confident that together, we are best
equipped to provide industry-leading solutions that will deliver greater
value to our customers."
Mike Bell, president and chief executive officer of Silver Spring
Networks, said, "Joining forces with Itron will enable us to help more
utilities and cities adopt the industrial Internet, improve their
performance and reliability, and better position themselves for a
connected future. This strong combination will address end-to-end
solutions for our customers and will create immediate value for our
stockholders; it will also provide new opportunities for our employees
as part of a larger, global technology leader for the Internet of
Important Things."
Compelling strategic and financial benefits
-
More value for customers: Itron envisions it will converge the
best of both companies' complementary technologies to provide
streamlined solutions on standards-based platforms, allowing the
combined company to optimize industrial networks and deliver more
solutions that increase value for customers.
-
Large partner ecosystem: Itron values an open platform approach
to industry partners and is committed to supporting multi-vendor
offerings for the smart utility and smart city sectors.
-
Enhances value-added services: With more than 90 million smart
endpoints globally from the combined customer bases, Itron will be
able to offer customers more outcome-based solutions, creating a large
recurring revenue opportunity in the high-growth software and services
segment.
-
Accelerates innovation: The combined company's strong
engineering talent, technology and deep data domain expertise will
drive greater innovation and support for customers.
-
Significant synergies: Itron anticipates approximately $50
million of annualized cost synergies within three years of completing
the transaction by optimizing combined operating expenses. The
transaction also will create additional revenue synergy potential.
-
Accretive transaction: The acquisition is expected to have a
positive impact on Itron's long-term growth rate, be accretive to
gross margin in the first year and be accretive to non-GAAP EPS and
adjusted EBITDA margin in year two, excluding one-time,
transaction-related costs.
Itron plans to finance the transaction using a combination of cash and
approximately $750 million in incremental new debt. Fully committed
financing has been provided by Wells Fargo.
The transaction is expected to close in late 2017 or early 2018 and is
subject to customary closing conditions, including regulatory approval
and the approval of Silver Spring's stockholders.
Centerview Partners and Credit Suisse are acting as financial advisors
to Itron, and Jones Day is acting as its legal advisor. Evercore is
acting as financial advisor and Fenwick & West LLP as legal advisor to
Silver Spring.
Company Webcast
Itron will host a webcast today, Sept. 18, 2017 at 8:30 a.m. EDT to
discuss this transaction. The webcast and presentation materials will be
made available 10 minutes before the start of the call and will be
accessible on Itron's website at http://investors.itron.com/events.cfm.
A replay of the audio webcast will be made available at http://investors.itron.com/events.cfm.
A telephone replay of the conference call will be available through
Sept. 29, 2017. To access the telephone replay, dial (888) 203-1112
(Domestic) or (719) 457-0820 (International) and enter passcode 5228925.
About Itron
Itron is a world-leading technology and services company dedicated to
the resourceful use of energy and water. We provide comprehensive
solutions that measure, manage and analyze energy and water. Our broad
product portfolio includes electricity, gas, water and thermal energy
measurement devices and control technology; communications systems;
software; as well as managed and consulting services. With thousands of
employees supporting nearly 8,000 customers in more than 100 countries,
Itron applies knowledge and technology to better manage energy and water
resources. Together, we can create a more resourceful world. Join us: www.itron.com.
Itron® and OpenWay® are registered trademarks of
Itron, Inc. All third-party trademarks are property of their respective
owners and any usage herein does not suggest or imply any relationship
between Itron and the third party unless expressly stated.
About Silver Spring Networks
Silver Spring Networks enables the Internet of Important Things™ by
reliably and securely connecting things that matter. Cities, utilities,
and companies on five continents use the company's cost-effective,
high-performance IoT network and data platform to operate more
efficiently, get greener, and enable innovative services that can
improve the lives of millions of people. With more than 26.7 million
devices delivered, Silver Spring provides a proven standards-based
platform safeguarded with military grade security. Silver Spring
Networks' customers include Baltimore Gas & Electric, CitiPower &
Powercor, ComEd, Consolidated Edison, CPS Energy, Florida Power & Light,
Pacific Gas & Electric, Pepco Holdings, and Singapore Power. Silver
Spring has also deployed networks in Smart Cities including Copenhagen,
Glasgow, Paris, Providence, and Stockholm. To learn more, visit www.ssni.com.
Non-GAAP Financial Information
To supplement our consolidated financial statements presented in
accordance with GAAP, we use certain non-GAAP financial measures,
including non-GAAP operating expense, non-GAAP operating income,
non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA, adjusted
EBITDA margin, constant currency and free cash flow. We provide these
non-GAAP financial measures because we believe they provide greater
transparency and represent supplemental information used by management
in its financial and operational decision making. We exclude certain
costs in our non-GAAP financial measures as we believe the net result is
a measure of our core business. The company believes these measures
facilitate operating performance comparisons from period to period by
eliminating potential differences caused by the existence and timing of
certain expense items that would not otherwise be apparent on a GAAP
basis. Non-GAAP performance measures should be considered in addition
to, and not as a substitute for, results prepared in accordance with
GAAP. Our non-GAAP financial measures may be different from those
reported by other companies. A more detailed discussion of why we use
non-GAAP financial measures, the limitations of using such measures, and
reconciliations between non-GAAP and the nearest GAAP financial measures
are included in our 10-K for the year ended Dec. 31, 2016.
Cautionary Statement Regarding Forward-Looking Statements
Statements in this communication that are not historical facts,
including statements about beliefs, plans and expectations are
forward-looking statements. Statements that include words such as
"anticipates," "expects," "intends," "plans," "predicts," "believes,"
"seeks," "estimates," "may," "will," "should," "would," "potential,"
"continue," "goals," "targets" and variations of these words (or
negatives of these words) or similar expressions of a future or
forward-looking nature identify forward-looking statements. In addition,
any statements that refer to projections or other characterizations of
future events or circumstances, including any underlying assumptions are
forward-looking statements. Forward-looking statements are based on
current expectations and are subject to a number of risks, factors and
uncertainties that could cause actual results to differ materially from
those described in the forward-looking statements. Important factors and
uncertainties that could cause actual results to differ materially from
those described in these forward-looking statements include, without
limitation: the risk that Silver Spring's stockholders do not approve
the transaction; uncertainties as to the timing of the transaction; the
possibility that the parties may be unable to achieve expected synergies
and operating efficiencies in the merger within the expected timeframes
or at all and to successfully integrate Silver Spring's operations into
those of Itron; such integration may be more difficult, time-consuming
or costly than expected; revenues following the transaction may be lower
than expected; operating costs, customer loss and business disruption
(including, without limitation, difficulties in maintaining
relationships with employees, customers, clients or suppliers) may be
greater than expected following the transaction; the retention of
certain key employees at Silver Spring; risks associated with the
disruption of management's attention from ongoing business operations
due to the transaction; the conditions to the completion of the
transaction may not be satisfied, or the regulatory approvals required
for the transaction may not be obtained on the terms expected or on the
anticipated schedule; the parties' ability to meet expectations
regarding the timing, completion and accounting and tax treatments of
the merger; the impact of indebtedness incurred by Itron in connection
with the transaction and the potential impact on the rating of
indebtedness of Itron; legal proceedings that may be instituted against
Itron or Silver Spring and others following announcement of the proposed
transaction; the effects of the business combination of Itron and Silver
Spring, including the combined company's future financial condition,
operating results, strategy and plans; other factors detailed in Silver
Spring's Annual Report on Form 10-K filed with the U.S. Securities and
Exchange Commission (the "SEC") for the fiscal year ended Dec. 31, 2016
and Silver Spring's Quarterly Report on Form 10-Q filed with the SEC on
August 9, 2017, which are available at http://www.sec.gov
and on Silver Spring's website at www.ssni.com;
and other factors discussed in Itron's Annual Report on Form 10-K filed
with the SEC for the year ended Dec. 31, 2016 and Itron's other filings
with the SEC, which are available on Itron's website at www.itron.com.
Itron and Silver Spring assume no obligation to update the information
in this communication, except as otherwise required by law. Readers are
cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof.
Important Additional Information and Where to Find It
This communication relates to the proposed merger transaction in which
Itron will acquire Silver Spring. In connection with the proposed
transaction, Itron and Silver Spring intend to file relevant materials
with the SEC, including Silver Spring's proxy statement on Schedule 14A.
This communication does not constitute a solicitation of a proxy, an
offer to purchase or a solicitation of an offer to sell any securities
and is not a substitute for the proxy statement or any other document
that Silver Spring may file with the SEC or send to its stockholders.
Following the filing of the definitive proxy statement with the SEC,
Silver Spring will mail the definitive proxy statement and a proxy card
to each stockholder entitled to vote at the Silver Spring special
meeting relating to the proposed transaction. INVESTORS AND SECURITY
HOLDERS OF SILVER SPRING ARE URGED TO CAREFULLY READ THE PROXY STATEMENT
AND THESE OTHER MATERIALS IN THEIR ENTIRETY (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT ITRON, SILVER SPRING AND THE
PROPOSED TRANSACTION. The proxy statement and other documents filed by
Silver Spring with the SEC may be obtained free of charge at Silver
Spring's website www.silverspringnet.com
or at the SEC's website at www.sec.gov.
These documents may also be obtained free of charge from Silver Spring
by requesting them by mail at Silver Spring, 230 West Tasman Drive, San
Jose, California 95134, Attention: Investor Relations, or by telephone
at Silver Spring (669) 770-4333. The documents filed by Itron with the
SEC may be obtained free of charge at Itron's website at www.itron.com
or at the SEC's website at www.sec.gov.
These documents may also be obtained free of charge from Itron by
requesting them by mail at 2111 N Molter Road, Liberty Lake, Washington
99019, Attention: Investor Relations, or by telephone at (509) 891-3283.
Certain Participants in the Solicitation
Itron, Silver Spring and certain of their directors, officers and
employees may be deemed to be participants in the solicitation of
proxies from the stockholders of Silver Spring in connection with the
proposed transaction. Information about the persons who may, under the
rules of the SEC, be considered to be participants in the solicitation
of Silver Spring's stockholders in connection with the proposed
transaction, and any direct or indirect interests, by security holdings
or otherwise, they have in the proposed transaction, will be set forth
in Silver Spring's definitive proxy statement when it is filed with the
SEC. Information regarding Silver Spring's directors and executive
officers and their ownership of Silver Spring's securities is set forth
in the definitive proxy statement for Silver Spring's 2017 Annual
Meeting of Stockholders, which was filed with the SEC on April 14, 2017,
and its Annual Report on Form 10-K for the fiscal year ended Dec. 31,
2016, which was filed with the SEC on March 10, 2017. To the extent
holdings of such participants in Silver Spring's securities are not
reported, or have changed since the amounts described in the proxy
statement for the 2017 Annual Meeting of Stockholders, such changes have
been reflected on Initial Statements of Beneficial Ownership on Form 3
or Statements of Change in Ownership on Form 4 filed with the SEC.
Additional information regarding the interests of such individuals in
the proposed transaction will be included in the proxy statement
relating to such acquisition when it is filed with the SEC. These
documents may be obtained free of charge at the SEC's website at www.sec.gov.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170918005459/en/
Itron, Inc.
Media Contact:
Angela Lockwood, 509-891-3524
Director,
Global Marketing
or
Investor Contact:
Barbara Doyle,
509-891-3443
Vice President, Investor Relations
or
Silver
Spring Networks
Media Contact:
Amy Nunnemacher,
669-770-4183
Senior Manager, Public Relations
or
Investor
Contact:
Mark McKechnie, 669-770-4664
Vice President, Investor
Relations
Source: Itron, Inc.
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