Siemens to buy smart grid vendor for $381 million

Reuters

On Monday, Siemens AG announced it will buy RuggedCom Inc, a maker of data communications networks systems, for about $381 million in cash, to improve access to markets in North America and the Asia-Pacific region.

RuggedCom (Ontario, Canada), which had revenues of around $94 million last year and employs 360 people, makes heavy-duty routers and Ethernet cables specifically designed for challenging environments such as those found in electric power substations and smart grids.

The deal, considered small for Europe's biggest engineering company, is Siemens' (Munich, Germany) largest since it took over Israeli solar thermal fields maker Solel for $418 million in 2009.

Siemens' offer topped a recent $278 million bid from U.S. manufacturer Belden Inc (Elizabeth, N.J., USA), which said in a statement on Monday that it would not raise its bid and instead plans to look for other opportunities.

The German company's $32.80 per share bid represents a premium of 26% to RuggedCom's closing on Friday. Shares at RuggedCom were up 25% at $32.60 in afternoon trade on Monday on the Toronto Stock Exchange.

Anton Huber, Chief Executive of Siemens Industry Automation division, said the acquisition of RuggedCom would improve Siemens' router and switch products. Siemens' portfolio of industrial Ethernet networking components is enjoying above-average growth rates compared with the competition, he said without elaborating.

"It's not a large company and is a good move as Siemens will be able to reduce its cash pile," analyst Pascal Gottmann of Merck Finck said.

RuggedCom's board of directors will recommend that its shareholders accept the offer, Siemens said.

In December, Siemens acquired eMeter Corporation (San Mateo, Calif., USA), a startup company focusing on smart grid technologies for utilities such as power and water.  eMeter received a total of $68.8 million over six rounds of institutional funding. JP Morgan advised eMeter in the acquisition, which is expected to close this month.

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