Toshiba (News - Alert) Corp. of Japan, a world leader in electronics and power management systems, announced on May 19^th that it has entered into a definitive agreement to acquire Landis+Gyr AG, a Swiss electronic-metering company, for $2.3 billion. The acquisition is subject to regulatory approvals and other customary closing conditions.

This purchase will substantially enhance the scope of Toshiba’s Smart Grid and Smart Community businesses and position the company as a global competitor with world-class capabilities. Upon completion of the purchase, Toshiba will promote operational and technological synergies and further growth in its Smart Grid and Smart Community businesses, toward achieving net sales of $8.6 billion in fiscal year 2015, against current annual sales of $3.7 billion.

Tokyo-based Toshiba beat private equity firms TPG Capital of Fort Worth and EQT Partners AB of Stockholm, which also submitted takeover proposals to Landis+Gyr . Other companies, including Fairfield, Connecticut-based General Electric Co. and Boston- based Bain Capital LLC dropped out of the process, Bloomberg said on May 13^th.

Founded in 1896, Landis+Gyr, starting developing and launching its first range of digital meters for commercial use nearly a century later, in 1981. With headquarters near Lake Zug, the company operates in 30 countries – and boasts a client list that includes E.ON AG Power & Gas of Düsseldorf;  Centrica Plc (CNA)’s British Gas unit in Windsor, England; and Pacific Gas and Electric (PG&E (News - Alert)) Corp., in San Francisco.

Today, the company – which had been controlled by Australian investment firm Bayard Capital’s Bayard Energy division, makes smart meters that enable utilities and their customers to check energy usage.  In January, Landis+Gyr was chosen by State Grid Corp. of China to help build the world’s largest Smart Grid, agreeing to supply more than 10,000 commercial and industrial advanced electricity meters in six Chinese provinces

Forecasts indicate that, over the next decade, the Smart Grid market will grow to $71.8 billion, six times today’s level. While the original Smart Grid business is a platform for power system networks, the latest trend is a shift to a higher-concept, “Smart Community” – in which diverse infrastructure systems, including energy, water, transportation, and ICT (information and communications technology), deliver comprehensive solutions to consumers.

As a pioneer in the Smart Community business, Toshiba is already involved in a number of Smart Grid and Smart Community demonstration projects in Japan and overseas, including the United States, France, and India.

The combination of Landis+Gyr’s advanced smart metering technologies and services, plus its extensive customer base, with Toshiba’s comprehensive expertise in energy management for utility companies, and the corporate (buildings) and consumer (homes) sectors, will enable Toshiba to provide customers with sophisticated one-stop solutions that offer communities optimum power monitoring and management, plus applications and services based on cloud computing technologies.

“By drawing on the diverse capabilities of each company and maximizing synergies, Toshiba will enter new business domains encompassed by the Smart Community concept, centering on integrated energy management systems,” the company noted in its official release.

Toshiba established a dedicated Smart Community Division to promote its Smart Community business in October 2010. The division reports directly to the president & CEO. Eighteen months later, on April 1, 2011, Toshiba established a new in-house company, the Social Infrastructure Systems Company, which reinforces Toshiba’s ability to offer integrated solutions across power transmission and distribution, a broad range of social infrastructure – including railway systems, automotive systems and rechargeable batteries – and to support the Smart Community business.

Toshiba and Landis+Gyr will together develop total energy solutions that meet diverse hardware and software standards and deliver Smart Grid and Smart Community products and services worldwide.

Landis+Gyr, as a standalone growth platform within Toshiba, will continue to hold its properties, equipment, employees and trademark rights, and will expand and reinforce business by making use of complementary relations with Toshiba. The company will aim to expand orders received in Europe and the United States, and in China, India and Brazil, which are promoting rapid modernization of social infrastructure.

Landis+Gyr is expected to exploit synergies with Toshiba’s energy management business to create new business opportunities. Beyond this, Toshiba and Landis+Gyr will cooperate closely in developing and executing business strategies and promoting operations.

As its works to maximize synergies with Landis+Gyr, Toshiba will continue to promote alliances with leading-edge companies around the world, centering on cloud computing and solutions services, aiming to expand its global operations and to grow the Smart Community business.

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