Yes, Landis+Gyr (L+G), one of the five largest global meter companies, was up for sale, with some very well known names apparently interested in acquiring: GE, Honeywell and ABB were all mentioned. Moreover, when private equity players were also said to be considering a bid, even they were well known (Texas Pacific Group (TPG) and EQT).
Unhappily, it didn't seem to last long as yesterday the process ended with Toshiba emerging as the acquirer, winning with a bid of $2.3bn.
Three years ago L+G appeared to be ready to take another course by completing a refinancing package with a number of banks including Barclays Capital, Lloyds TSB, Credit Suisse and Goldman Sachs and "uniting its family of green technology companies under one global brand".
It was all consistent with launching an IPO, particularly as the market was, seemingly, about to turn and smart meters and the network around them would gain an unstoppable momentum.
Although there has been some 'issues' such optimism has proved correct, although at that time no one envisaged that the Obama stimulus package would give such a huge helping hand in financing smart meters.
No matter how large the market is predicted to be though, the fact of the matter is that metering, even 'smart' ones, is a tough business.
Firstly, as one senior metering executive has said, it's actually very difficult to differentiate yourself in the field because there are only five components in a smart meter – metrology, casing, communications, processing and firmware – and only on the last can you extract value.
Secondly, it's a game of scale. Utilities like their suppliers, for the most part, to be very large and "safe" in more ways than one – no financial or operational mishaps due to immaturity, for instance.
However, they also like to drive a hard bargain and so the margins on meters aren't exactly spectacular. They also like their meters to last in excess of ten to fifteen years, so once they're in there's not a great deal of need for replacement.
Amid all this Chinese manufacturers are winning multi-million meter contracts as a matter of course, such is the size of the market, and they pose a very real new threat to manufacturers everywhere.
The trick therefore is to build a business that has a more lucrative software and solutions offer around the core hardware.
L+G certainly gave it a go with Gridstream, a holistic offering for utilities based on "multi-energy advanced metering", "personal energy management" and "network management", as well as taking a stake in MDMS player Ecologic Analytics.
However, large contracts that wrap a number of products and services together don't come along often and in the latest BC Hydro didn't give it to L+G – instead they confirmed that they would contract with Itron for the supply of not only the meter themselves but the "[Itron] OpenWay Collection Engine headend software, the [Itron] OpenWay wireless mesh communication network, and Itron's meter data management system".
Other meter players have tried to add value in other ways, or made their market much bigger: Elster acquired EnergyICT and their MDMS software in 2009, whilst their EnergyAxis platform appeals to mid-sized utilities and those in water as well, whilst Sensus has built up a business on reliability of meter reading from long range radio, which works particularly well in the gas and water industry where meters are often in difficult to reach.
Given such a landscape, becoming part of a global giant such as Toshiba makes sense – L+G's revenues ($1.533bn) lag Itron ($2.26bn) in the metering world but both are dwarfed by Toshiba's $69bn. With that kind of financial backing it may be easier to bid for the largest contracts, whilst developing and extending the offer more fully.
As for Toshiba, they appear to have paid the money for utility relationships, 8,000 of them according to the press release, and to their generation, transmission and distribution interests they now have the neigbourhood and housing metering environment (it's a journey that GE is making as well).
They say L+G will be a "standalone growth platform within Toshiba", whilst at the same time saying that they would continue to "promote alliances with leading-edge companies around the world, centering on cloud computing and solutions services".
In addition, they view L+G as an important part of their plan to become a force in that they term the "Smart Community".
According to Toshiba, the smart community "supports diverse infrastructure systems, including energy, water, transportation and ICT, delivers comprehensive solutions to consumers, and secures the integrated modernization of the overall infrastructure supporting entire towns and cities".
It all sounds suitably futuristic, but is actually quite vague and, not unlike many other "visions" that make complete sense on a piece of paper, it ignores the real world with the myriad challenges of modernizing individual pieces of infrastructure, let alone doing it in an integrated way.
However, Toshiba are a big business so they have a chance to make it reality, and L+G could be a relatively small part of this.
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