Canadian Electrical Wholesaler

Hubbell

Januray 2, 2018

Hubbell Incorporated has announced that it has entered into a definitive agreement to acquire Aclara Technologies LLC ("Aclara"), an affiliate of Sun Capital Partners, Inc. ("Sun Capital") for approximately $1.1 billion in an all-cash transaction.

The transaction strengthens and broadens Hubbell Power Systems' competitive position across utility markets. The acquisition will combine the complementary strengths of Aclara and Hubbell Power Systems, providing the opportunity to integrate Aclara's strong customer relationships and smart infrastructure solutions into the Hubbell portfolio and accelerate ongoing innovation efforts to address utility customer demand for data and integrated solutions.

Aclara offers a comprehensive suite of solutions, including advanced metering infrastructure, meters and edge devices, software, and installation services. These products and services provide utilities visibility into their distribution networks, optimize network performance and help engage with their customers. With approximately 1,200 people working with more than 800 electric, water and gas utilities worldwide, Aclara provides actionable insights to help utilities predict, plan and respond to conditions, improve operational efficiency and promote resource conservation to customers. Aclara reported revenues of $500 million and adjusted EBITDA (1) of $90 million for the fiscal year ended September 30, 2017.

"This is an exciting transaction that is consistent with our long-standing acquisition strategy. Aclara participates in attractive markets that complement our core with high quality products and talented people," said David G. Nord, Chairman, President and Chief Executive Officer. "Together with Aclara, Hubbell will be even better positioned to serve customers through a differentiated smart grid solution and expanded portfolio. Hubbell Power Systems has a history of successfully integrating acquisitions under Gerben Bakker's leadership, and we both look forward to welcoming our new colleagues. We have long admired the position of Aclara's businesses in the industry, and are confident that integrating Aclara's capabilities with Hubbell's will allow us to deliver increased value to customers and shareholders."

"We are delighted to join a company with Hubbell's resources, alliance relationships with major utilities, and shared commitment to quality and innovation," said Allan Connolly, President and CEO of Aclara. "Aclara appreciates the support Sun Capital provided to establish us as a world leading provider of end-to-end, smart infrastructure solutions for electric, water and gas utilities. We look forward to our future with Hubbell and all that we will achieve together."    

STRATEGIC AND FINANCIAL BENEFITS OF THE TRANSACTION

  • Strengthens competitive position of attractive Hubbell Power Systems business. The addition of Aclara's software and analytics solutions, along with its robust and flexible communications networks, to Hubbell Power Systems' performance-critical components, will provide a differentiated solution for a broader set of utility customers to meet their "next gen" needs.
  • Extends smart technology and automation capabilities. Aclara's advanced metering solutions and grid monitoring sensor technology, as well as its leading software enabled installation services, will expand Hubbell's presence in utility automation, and will allow Hubbell to deliver an end-to-end solution to customers.
  • Robust financial profile. The transaction is expected to be accretive in 2018 to Hubbell's diluted EPS, excluding intangible amortization and deal related costs, and in 2019 on a GAAP basis. Further, Hubbell expects to maintain an investment grade rating.

TRANSACTION FINANCING AND APPROVALS

Hubbell has obtained fully committed bridge financing from J.P. Morgan Securities LLC, BofA Merrill Lynch, and HSBC Securities (USA). Hubbell expects its debt-to-adjusted EBITDA(2) ratio to be 3.1x at the close of the transaction, and anticipates reducing this ratio over the next few years.

The transaction, which is expected to be completed in the first quarter of 2018, is subject to the satisfaction of customary closing conditions, including U.S. antitrust clearance.

ADVISORS

J.P. Morgan Securities LLC is serving as financial advisor to Hubbell, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel. Morgan Stanley & Co. LLC and Stephens Inc. are acting as financial advisors to Aclara, and Morgan, Lewis and Bockius LLP is serving as legal counsel.

As part a family company, I have heard my father talking about business ever since I was a little boy. Although it had always interested me, I had never thought I would end up working alongside my father and my uncle in the company my grandfather started a long time ago.

I had been working in sales ever since I was 16 years old in many different markets than the one I was about to enter, but I thought it would be relatively easy to handle. Very quickly I started noticing the challenges of being a 22-year-old sales rep for electrical products entering a world where most of the manufacturers’ agents had been in the business for a long time.

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Laura Dempsey

Owen Hurst

Laura Dempsey has been working as an outside sales representative for E.B. Horsman & Son for over 15 years, and is a member of the BCEA U40 network of young professionals. She lives in Langley, BC and is proud of her position and work with E.B. Horsman, particularly as she is the second Dempsey generation to work for the company.

Laura’s mother Shelly has worked at E.B. Horsman for over 25 years, and instilled in Laura a determination to succeed. Laura followed in her mother’s footsteps after witnessing how much her mother enjoyed her work and the people she works with at E.B. Horsman.

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Laura Dempsey

Owen Hurst

I've known John Sencich since CEW began publishing. He agreed from the outset to be part of the newsletter’s Editorial Board. His contribution was regular and sustained. Always present to answer my technical questions, and refer me to the right person for additional information as needed. Always available despite his role as senior leader of an influential company.

Over the past five years, many industry insiders have cited John Sencich when I asked them to name someone who had made a difference in their lives or had inspired them as a leader.

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