Aclara Technologies’ pending acquisition of General Electric’s (GE’s) electric metering business underscores the shifting strategies among smart grid vendors. For Aclara, the move strengthens its goal to beef up its smart grid infrastructure. For GE, shedding its metering business fits in with its aim of becoming a more digital company. If the deal goes through by the end of 2015 as planned, Aclara would take over GE Meters’ global headquarters in Somersworth, New Hampshire. This includes 300 employees, as well as a satellite manufacturing plant in Chicago and a center of excellence in Bilbao, Spain. Terms of the deal were not disclosed.
St. Louis, Missouri-based Aclara intends to leverage GE Meters’ expertise in support of its concentration on important technology trends such as advanced metering infrastructure integration, cyber security, and cost-effective field upgradability, according to a management statement. Most of Aclara’s current smart metering business is among small and midsize municipal and rural electric utilities in the United States.
The Aclara-GE Meters deal follows a similar pending transaction by Honeywell, which announced in July its agreement to buy smart meter manufacturer Elster from Melrose Industries, a United Kingdom-based investment firm that specializes in buying and spinning off manufacturing firms. The Honeywell-Elster transaction is valued at $5.1 billion and is expected to close in the first quarter of 2016. In terms of scale, the Honeywell purchase of Elster is much larger than the Aclara-GE Meters transaction, given that Honeywell is expected to take over management of about 6,800 employees and the business includes gas and water meters, and not just electric versions.
For major smart meter competitors like Landis+Gyr, Itron, and Sensus, these pending deals have to give them some pause as they ponder what type of landscape they will compete in when 2016 rolls around. Do they double down on their own strengths, or do they seek new pathways, deals, or partners to stay relevant in the market? Along with other stakeholders, they need to also consider the fact that the smart metering business is undergoing some important changes, and that the pathway ahead is unclear in a somewhat down market. Major deployments of smart meters in Europe are stuck in slow gear, Chinese manufacturers are sniping from below on price and capabilities, and the U.S. market remains sluggish, though bigger deals are expected in the next year or two.
On a personal note, it is also somewhat sad to see a venerable brand like GE leave the meter market after some 130 years, but then again, business will be business.