Itron's Actaris Acquisition: Good Deal For Shareholders and Private Equity Alike

| About: Itron, Inc. (ITRI)

Itron Inc. (NASDAQ:ITRI), which provides technology to help utilities read their meters remotely, has benefited from a strong upgrade cycle as utilities seek to cut the costs of manual meter-reading (including treatment for dog bites). It is therefore no surprise that the company wants to expand the business abroad.

Itron to Pay $1 Billion for Actaris
Itron Inc., a leading supplier of electricity meters in North America, has announced a deal to acquire Actaris Metering Systems of Europe for more than $1 billion.It also will retire some $600 million of the European company’s debt.

The acquisition will more than double the Spokane-area company’s income while expanding its reach to about 300 million Actaris electricity, gas and water meters in 30 countries, according to a news release issued Sunday.

The deal is being financed primarily with new debt, but Itron generates strong cash flow and will be adding more from Actaris, so it shouldn’t be a big problem. As a result, doubling income while increasing the share count by just 15% seems like a pretty good deal for existing shareholders.

But the best deal of all was reserved for 10 private equity investors, who were given a discount from the recent trading so as not to disrupt the market price. The $57.50 they paid (which they won’t even have to shell out until Thursday) has already yielded a 17% return.

ITRI 2-yr chart: