Glasgow-based Smart Metering Systems plc (SMS) said on Thursday a company owned by funds advised by US-based private equity firm KKR and its affiliates will take it private in an all-cash deal of about £1.3 billion.
The £9.55 per-share offer represents a premium of 40.4% to the stock’s Wednesday close.
SMS said its directors intend to unanimously recommend that the shareholders vote in favour of the deal.
SMS employs about 1,500 people, primarily in the UK.
SMS CEO Tim Mortlock said: “KKR’s offer recognises the strength and resilience of our model and will ensure SMS has the necessary capital to accelerate and unlock its full growth potential.
“The offer price represents a significant premium to the current share price and allows shareholders to realise immediate and attractive value for their shareholding.”
Tara Davies, Partner and Co-Head of European Infrastructure at KKR, said: “SMS has a strong asset base and a clear strategy across different business lines which are critical enablers of the UK’s Net Zero goals, and we share the team’s vision of putting SMS at the heart of the UK’s energy transition.
“Achieving this growth opportunity requires significant capital of a scale, flexibility and certainty which is best facilitated in the private markets.
“KKR is a major investor in UK infrastructure and behind the energy transition, and we will bring our expertise and operational resources to bear in supporting SMS to invest at the level required and successfully scale its business over the long-term.”
In a joint statement, KKR said: “KKR believes that SMS is a business of high quality, with a best-in-class management team and long-term, contracted and inflation-protected cashflow streams.
“The business has the potential to substantially contribute to and enable the energy transition. SMS represents an established smart meters platform with a growing capability in grid-scale battery storage assets and other carbon reduction activities, and is expected to play a leading role to support the UK Government’s ambition to be net zero by 2050 …
“KKR believes that SMS, under private ownership, will be able to accelerate its growth and continued transition from a metering provider and grid-scale battery storage operator to a fully integrated, end-to-end energy infrastructure company which owns, installs and manages carbon reduction assets …
“The SMS Group has a large and attractive pipeline of broader opportunities including the ongoing Battery Energy Storage Systems (BESS) rollout, together with the development of wider carbon reduction (CaRe) products.
“The size of these opportunities and the capital that would be required to maximise the return on those opportunities is substantial.
“The SMS Group may not be able to fully capitalise on these opportunities with internally-generated cash flows, additional debt facilities or asset recycling alone.
“A private setting will enable SMS to operate in a way which is not capital constrained, and which facilitates the investment needed to fully realise the growth opportunity presented by the UK’s energy transition …
“KKR’s operational capability, partnership approach and extensive experience with investing behind the energy transition will enable it to be a strong partner to SMS as it progresses through its next phase of development, particularly in terms of flexible access to long term competitive capital.”