UK's Smart Metering Systems agrees to EUR 1.6bn takeover by KKR

UK integrated energy infrastructure company Smart Metering Systems plc (LON:SMS) has agreed to be acquired by US private equity firm KKR & Co (NYSE:KKR) in a deal with an enterprise value of about GBP 1.4 billion (USD 1.76bn/EUR 1.63bn).

Under the agreement, KKR will take the Glasgow, Scotland-based company private for 955 pence per SMS share in cash, according to a statement from Thursday.

The announcement triggered a substantial increase in SMS shares. As of 1309 GMT on Thursday in London, the company's stock was trading 41.03% higher at 959 pence.

The agreed transaction implies a total equity valuation of about GBP 1.3 billion and represents a premium of about 43.8% to the target company’s six-month volume weighted average share price as of December 6, 2023.

Established in 1995, SMS specialises in multi-utility infrastructure connections, meter asset management, energy efficiency solutions and grid-scale battery storage, among others.

More specifically, the company manages about 4.5 million metering and data assets at home. It claims to have UK’s fourth-largest portfolio of operational battery energy storage systems (BESS) and a pipeline for 860 MW of assets, of which 240 MW are currently operational, 370 MW are secured and a further 250 MW are under exclusivity. In addition, its residential division is developing behind-the-meter solar, storage, heat and electric vehicle services for domestic households.

KKR believes that the business to be acquired is expected to play a leading role in advancing the UK Government's ambition to be net zero by 2050, while the private ownership will help 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 transaction with the US buyout firm has been recommended unanimously by the SMS board. Subject to shareholder and regulatory approvals, the parties anticipate wrapping up the deal in the first quarter of 2024.

(GBP 1 = USD 1.259/EUR 1.168)

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