US smart meter manufacturer Echelon has sold its grid operations to European IT systems company S&T AG in a move to refocus its operations onto embedded technology for the Industrial Internet of Things (IIoT).
Under the terms of the agreement, Echelon will receive approximately US$5 million in upfront consideration, dependent in part on the value of net assets at closing. However, after fees, expenses, and restructuring charges are considered the company expects the net benefit to be nominal.
One advantage of the deal for Echelon, however, will be to supply its narrowband power line communications chips to S&T for use in their smart meters and related products.
Echelon will also receive future benefits in the form of revenue from the purchase of these products, as well as rental income, and potential performance-based consideration of up to US$1 million.
As part of the transaction approximately 60 current Echelon employees are expected to join S&T. The acquisition is anticipated to be accomplished via a subsidiary established by S&T.
Smart energy networking platform
Commenting on the deal, which is expected to close by the end of the year, Ron Sege, chairman and CEO, Echelon Corp, said: “This transaction will allow us to focus fully on becoming a key enabler in the transition to the Industrial Internet of Things, with the confidence of knowing that S&T will continue to operate our grid business and support our customers, partners and sales pipeline.
“With the closing of this agreement, we can turn our attention to developing, marketing and selling our open-interoperable control networking platform for the IIoT — especially bringing the benefits of IP-based converged control systems to building automation, outdoor lighting and indoor lighting applications worldwide.”
Boss of Austria-based S&T Hannes Niederhauser said that the acquisition would allow the company to expand “their smart energy capabilities" and allow them to offer end-to-end solutions using Echelon's Networked Energy Services platform to utilities in Europe and beyond.