March 2, 2017 / 5:59 PM / 5 months ago

EXCLUSIVE-Japan's Toshiba prepares $2 bln sale of Landis+Gyr -sources

3 Min Read

* Process could result in sale or IPO -sources

* Smart meter makers have been key M&A targets

* Toshiba bought Landis+Gyr in 2011 (Adds context, potential bidders, valuation)

By Christoph Steitz, Arno Schuetze and Oliver Hirt

FRANKFURT/BERLIN/ZURICH, March 2 (Reuters) - Japan's Toshiba Corp 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 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, Advent, KKR, Blackstone, Onex 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 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, Sulzer or Belimo, which trade at between 12-19 times.

$1 = 0.9506 euros Editing by Susan Fenton

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