Itron, Inc. ITRI recently announced the expiry of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) pertaining to its pending acquisition of Silver Spring Networks, Inc. SSNI. This development brings Itron a step closer to the closure of the acquisition. The transaction is expected to close in early 2018, pursuant to the compliance of other customary closing conditions as well as the approval of Silver Spring’s shareholders.
In September 2017, Itron signed a definitive agreement to acquire all outstanding shares of Silver Spring for $830 million. Through the deal, Itron will converge the companies’ best complementary technologies to provide streamlined solutions on standard-based platforms, enabling the combined entity to optimize industrial networks and deliver more solutions that enhance value for customers.
Also, the combined company’s engineering expertise, technology and deep data-domain know-how will drive innovation and support for customers. Itron anticipates approximately $50 million of annualized cost synergies within three years of closing this transaction.
In another development, Itron announced the commencement of a private offering of $300 million aggregate principal amount of senior notes due 2025, subject to market and other conditions. The offering of the notes is part of the financing of the merger consideration for the Silver Spring acquisition.
Moreover, Itron intends to use the proceeds from the offering, together with cash on hand and borrowings under the company’s senior credit facilities, to fund the merger consideration of the above-mentioned buyout. It will also utilize the funds to refinance its existing indebtedness and Silver Spring’s indebtedness, as well as pay fees and expenses.
Itron anticipates to grow through a combination of internal new product development, licensing technology, distribution agreements, partnering arrangements, and acquisitions of technology. The company expects these activities to be funded with its strong balance sheet.
However, Itron has underperformed the industry it belongs to in the past year, mainly due to elevated expenses and fluctuation in currency rates. The company’s shares have gained a mere 2.1% compared with 38% growth recorded by the industry.
Zacks Rank & Key Picks
Itron currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same industry include AMETEK, Inc. AME and Fortive Corporation FTV. Both stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
AMETEK has a long-term earnings growth rate of 11.4%. Its shares have rallied 46.2%, year to date.
Fortive has a long-term earnings growth rate of 10.1%. So far this year, shares of the company have gained 36%.
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