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
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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View the full release here:
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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,
509-891-3524Director, Global MarketingorInvestor Contact:Barbara
Doyle, 509-891-3443Vice President, Investor RelationsorSilver
Spring NetworksMedia Contact:Amy Nunnemacher,
669-770-4183Senior Manager, Public RelationsorInvestor Contact:Mark
McKechnie, 669-770-4664Vice President, Investor Relations
SILVER SPRING NETWORKS INC (NYSE:SSNI)
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SILVER SPRING NETWORKS INC (NYSE:SSNI)
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