Exclusive: Japan's Toshiba prepares $2 billion sale of Landis+Gyr - sources

By Christoph Steitz, Arno Schuetze and Oliver Hirt
A logo of Toshiba Corp is seen outside an electronics retail store in Tokyo, Japan, February 14, 2017. REUTERS/Toru Hanai

By Christoph Steitz, Arno Schuetze and Oliver Hirt

FRANKFURT/BERLIN/ZURICH (Reuters) - Japan's Toshiba Corp <6502.T> is preparing a potential $2 billion divestment of smart meter group Landis+Gyr, hoping to rake in capital after a major writedown on its U.S. nuclear unit last month, three people familiar with the matter said.

The group has hired UBS <UBSG.S> to explore a potential sale or initial public offering of the Swiss-based business, which could take place as early as after the European summer, they added.

A spokeswomen for Toshiba in Europe declined to comment. UBS also declined to comment.

Smart meter makers have seen a wave of M&A activity, with three major manufacturers up for sale in Germany alone, highlighting their significance as the energy industry goes digital and depends on live consumption data to a much greater extent.

Landis+Gyr, in which Toshiba owns a 60 percent stake, employs more than 5,700 staff and is active in over 30 countries. It said last week that sales would grow by nearly 5 percent to $1.64 billion in the fiscal year ending this month, adding it was "unaffected by Toshiba's challenges".

Toshiba announced a $6.3 billion writedown on its U.S. nuclear business last month, wiping out its shareholder equity and causing it to seek divestments to create a buffer for any fresh financial problems.

It is expected to approach buyout groups including CVC, Cinven [CINV.UL], Advent, KKR <KKR.N>, Blackstone <BX.N>, Onex <ONEX.TO> and Clayton, Dubilier & Rice as potential buyers of Landis+Gyr, one of the sources said, adding that industrial conglomerates were not expected to enter the fray.

Toshiba bought Landis+Gyr in 2011 for $2.3 billion jointly with state-backed Innovation Network Corporation of Japan (INCJ), which holds the remaining 40 percent in the company.

The deal would value Landis+Gyr at 10-11 times its annual core earnings (EBITDA), two of the people said, in line with the 10.7 times that U.S. water technology company Xylem <XYL.N> paid for Sensus USA Inc last year.

Toshiba will try to position Landis+Gyr as a Swiss industrial group, hoping to reach EBITDA multiples similar to those of Geberit <GEBN.S>, Sulzer <SUN.S> or Belimo <BEAN.S>, which trade at between 12-19 times.

(Editing by Susan Fenton)