Hubbell Inc. has acquired Aclara, a venture-capital-owned Smart Infrastructure Solution (SIS) provider to global utilities, for $1.1bn – in what appears to have been quite the bargain. The all-cash transaction sees Sun Capital exit Aclara, which had made a number of buys itself in the past three years, and Hubbell continue its expansion into the IoT.
It seems like a bit of an abrupt end for Aclara, as it had been a constant presence in the smart grid M&A scene for a good while. Its VC-owners evidently fancied an exit, and we can’t find anything to suggest that this was a stress sale. What it could represent is the beginning of a consolidation trend to parallel what has transpired in the semiconductor industry – as the industrial and utility markets snap up both disruptive IP and market share by absorbing the smaller players and startups.
In terms of figures, Hubbell posted annual revenues of $3.5bn last year, while Aclara hit $500m and an ‘adjusted EBITDA’ of $90m for the year ending in September. It looks like Hubbell will be taking on the 1,200 Aclara staff, and gaining access to its customer list of 800 utilities. Integrating those customer relationships into the Hubbell portfolio is cited as an opportunity pretty prominently in the announcement – and might be the most attractive part of Aclara for Hubbell, given the long life-times of these sorts of utility deals and the claimed $1bn backlog.
It looks like Sun Capital has seen a good return on its investment. It bought Aclara from ESCO Technologies in March 2014, after the parent tried to offload its smart grid subsidiary to focus on its core fluid control business. Sun Capital paid $130m for Aclara, which was a net loss of about $50m for ESCO. Back in 2013, Aclara had purchased Metrum Technologies, which provided meter communications tech – both power line and RF mesh – but the acquisition hadn’t driven the growth ESCO was hoping for, and had posted a $62m loss in 2013 despite having over 100 customers.
So Aclara appears to have grown well, under Sun Capital’s ownership. Back in November 2015, Aclara bought GE’s smart metering business, following in August 2016 with the acquisition of Tollgrade’s smart grid sensor portfolio – which included the LightHouse distribution monitoring platform and Sensor Management System (SMS) software, which included Predictive Grid Analytics. In January 2017, Aclara bought Apex CoVantage’s Smart Grid Solutions (SGS) business, which included the ProField workforce management system, and then in August 2017, it bought a majority stake in the GEPMICI joint-venture between GE and Manilla Electric Company.
“This is an exciting transaction that is consistent with our long-standing acquisition strategy. Aclara participates in attractive markets that complement our core with high quality products and talented people. Together with Aclara, Hubbell will be even better positioned to serve customers through a differentiated smart grid solution and expanded portfolio. Hubbell Power Systems has a history of successfully integrating acquisitions, and we have long admired the position of Aclara’s businesses in the industry,” said David Nord, CEO and President of Hubbell.
For Hubbell, which spans Commercial, Data Communications, Residential, Industrial, Oil & Gas, and Utility markets, the deal is designed to chiefly strengthen its Hubbell Power Systems business, through the addition of Aclara’s analytics systems and communications expertise.
In addition, Hubbell is looking forward to integrating the Aclara advanced metering portfolio, with the company citing those ProField ‘software enabled installation services’ as an opportunity for expanding its presence in utility automation. Currently, the Power portfolio covers distribution equipment (arresters, insulators, connectors, and enclosures), and the addition of Aclara should see those product families boosted by connectivity and data analytics – which should help utility customers to cut costs and boost efficiency.
This isn’t the first IoT move that Hubbell has made. Back in April 2017, Hubbell acquired iDevices, a smart home device maker that was best known for being an early supporter for Apple’s HomeKit platform – and consequently, one of the supporters that got hung out in the cold for some time, as Apple fumbled the launch.
“We are delighted to join a company with Hubbell’s resources, alliance relationships with major utilities, and shared commitment to quality and innovation,” said Allan Connolly, Aclara’s CEO and President. “Aclara appreciates the support Sun Capital provided to establish us as a world leading provider of end-to-end, smart infrastructure solutions for electric, water, and gas utilities. We look forward to our future with Hubbell and all that we achieve together.”