Siemens to Sell Metering Business and Six Other Units to U.S. Equity Firm KKR

Aug. 16, 2002
Siemens AG said it is selling several noncore businesses, including its metering business, to U.S. private equity firm Kohlberg Kravis Roberts & Co. (KKR)

Siemens AG said it is selling several noncore businesses, including its metering business, to U.S. private equity firm Kohlberg Kravis Roberts & Co. (KKR) for $1.69 billion.

The businesses will be transfered to a new Luxembourg-based holding company called Demag Holding in which KKR will have an 81 percent stake and Siemens a 19 percent stake, but they will be separately managed.

Siemens Metering is headquartered in Zug, Switzerland, and is a product business of Siemens' Power Transmission & Distribution Group. Siemens' U.S. metering operations, located in Lafayette, Ind., and Reynosa, Mexico, are included in the sale to KKR. The two locations of Lafayette and Reynosa currently employ 450 people.

The transaction would become effective upon anti-trust approval by the European Commission. The anticipated date is Sept. 30. Once approved, the new company would operate under the name Landis & Gyr. The financial terms of the transaction were not disclosed.

Siemens's metering business is the second electrical business in which KKR has taken an interest in recent months. KKR and Wendel Investissement, a French conglomerate, recently signed an agreement to buy Legrand for $3.6 billion from Schneider Electric. Schneider bought Legrand in July 2001, but European regulators blocked the deal on antitrust grounds last October. Schneider is appealing the ruling and could still hold onto Legrand, if it wins its appeal to the European Union Commission.

Richard Mora, currently president of Siemens Metering in Lafayette, will remain as head of the metering U.S. operations.

Mora said the sale has positive implications to the employees and to the U.S. market. “This move spells the beginning of a whole new chapter in the history of the Lafayette meter business,” he said. “We have a fresh start and are in command of our own future — which is looking very bright. The electric power industry is at a crossroads in the United States, and we know that the meters and systems that we manufacture and support here in Lafayette and Reynosa will play a critical role in helping both utilities and consumers conserve and efficiently measure electricity consumption,” he said.

The operation in Lafayette will serve as the U.S. headquarters for the new Landis & Gyr metering group. A dedicated sales force coupled with an agent and distributor network is also in place and will continue serving the electric utility market.

The Lafayette facility became part of Siemens in 1998 after Siemens' acquisition of Switzerland's Electrowatt AG. At that time, Siemens merged its existing metering business with Landis & Gyr. In fiscal 2001, the product business of Siemens Metering had 4,200 employees and sales of about $500 million, making it the world market leader in electricity meters.

Other Siemens businesses included in this transaction include Mannesman Plastics Machinery AG, a producer of injection molding and extrusion machinery for plastics manufacturing; Stabilus GmbH, a producer of gas springs and hydraulic dampers; Demag Cranes & Components, a designer and manufacturer of cranes and crane accessories for industrial applications; Gottwald Port Technology GmbH, a supplier of harbor logistics solutions; Network Systems, a provider of network integration services in the UK, France and Italy; and Ceramics GmbH, a supplier of technical ceramics — all of which belonged to the former Atecs Mannesmann group.

“This portfolio of companies provides a unique opportunity to acquire businesses with solid franchises and experienced management teams in a range of markets,” KKR managing director Johannes Huth said in a statement. “Each business is a market leader and we believe there are considerable opportunities to work with the incumbent management and to continue to build the individual businesses.”

In 1999, KKR acquired Siemens Nixdorf Retail and Banking Systems GmbH, renamed Wincor Nixdorf GmbH & Co. KG, from Siemens.