Itron of Spokane buying California’s Silicon Energy for $71.2 Million

Itron Inc. http://www.itron.com/ Spokane is purchasing a California energy-software services company for $71.2 million.

The acquisition of Silicon Energy, a privately held firm in Alameda, Calif., is expected to close before March 1, an Itron press release said Tuesday.

Tom Sowa
Staff writer The Spokesman Review

Buying Silicon Energy makes sense as part of Itron’s continuing plan to shed its image as simply a utility meter company, said Mima Scarpelli, Itron vice president of marketing.

Itron provides automated metering devices to utilities along with software and services that help manage data and monitor consumption.

While acquiring Silicon Energy, Itron is laying off about 40 employees from its Raleigh, N.C., software operations center. The North Carolina group was a previous Itron acquisition that continues to play a part in software development for Itron.

Silicon Energy develops applications used by electric and water utility companies and by large enterprise utility customers. The data are collected and used to measure and track customer usage, load information and consumption data.

"Silicon Energy brings to Itron access to markets we do not currently call on, such as commercial and industrial end-users, government and higher education," said Itron CEO LeRoy Nosbaum.

Those large energy users account for more than $160 billion of energy consumption annually in the United States.

Itron officials said Silicon Energy is expected to generate about $15 million in additional revenue in 2003.

Under terms of the deal, the $71.2 million will buy Silicon Energy’s outstanding shares of stock and repay approximately $4.2 million in convertible debt.

In light trading Tuesday on the Nasdaq, Itron’s stock dropped $1.26 to $18.49.

Scarpelli said the drop is a "knee-jerk" reaction by some investors who view the acquisition as an entry into a flat software market.

Itron officials also continue to decide whether to appeal a Minnesota court verdict of $7.4 million in damages awarded to a man claiming Itron violated his patent on a handheld meter. Itron says the patent, held by Ralph Benghiat, is invalid.

•Business writer Tom Sowa can be reached at (509) 459-5492 or at [email protected].

http://www.spokesmanreview.com/news-story.asp?date=012203&ID=s1291593&cat=section.business

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Alameda company strikes buyout deal
Silicon Energy’s sale to Washington firm follows two failed IPOs

By Alan Zibel
Oakland Tribune BUSINESS WRITER

Wednesday, January 22, 2003 – ALAMEDA — Silicon Energy Corp., a privately held Alameda company that makes electricity demand management software, will be acquired by Spokane, Wash-based Itron Inc. for $71.2 million, Itron announced Tuesday.

Silicon Energy’s software lets utilities and large energy users analyze energy consumption data, monitor the cost of power and scale back power usage during times of intense demand.

Founded in 1997, Silicon Energy filed for an initial public offering twice. It sought to raise $80.5 million in 2000 and $55 million in 2001, but did not complete either deal.

The company’s 85 employees will stay in Alameda, although there could be a small number of job cuts after the deal closes next month, said Mima Scarpelli, Itron’s vice president of investor relations.

Eric Prouty, an analyst with Adams, Harkness & Hill in Boston, said the deal represents "a fair price" for Silicon Energy. It makes economic sense, he said, considering that it has become difficult for startup companies like Silicon Energy to launch IPOs in a weak economy.

"The public markets have become a very difficult place," Prouty said. "Many private companies are going the route of being acquired."

Backed by venture capital, Silicon Energy was not yet profitable. It is expected to lose $10 million in 2002, before taxes, on revenues of $16.4 million, Itron said.

Itron makes automatic meter reading systems that let utilities collect data about electricity, natural gas and water consumption via radio and telephone. It also sells handheld meter-reading computers and software for utilities.

John Woolard, a former PG&E Corp. official who is Silicon Energy’s president and chief executive and one of the company’s cofounders, will become a vice president of Itron.

Woolard said in a statement that the two companies have "complementary components." By combining, Itron will be able to provide technology that "allows both utilities and large energy users to meet the dynamic and ever-increasing challenges of managing a real-time commodity such as energy," he said.

Itron also said it was cutting about 40 positions in Raleigh, N.C., and would transfer some employees from North Carolina to Alameda. The company’s shares fell 1.26, or 6.38 percent, to 18.49 in Tuesday’s trading.

Alan Zibel may be reached at (925) 416-4805 or [email protected] .

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