The field of prospective bidders for Japanese conglomerate Toshiba Corp‘s Swiss-based smart meter group Landis+Gyr has narrowed to two, three banking sources said on Monday.
The two, Goldman Sachs Group‘s private equity arm and Canada’s Onex Corp, are undertaking due diligence checks, the sources said.
A consortium of buyout firm CVC Capital Partners and Japanese conglomerate Hitachi Ltd had withdrawn its offer, as had Honeywell International Inc, the sources said.
A first round of bids for Landis+Gyr, for which bankers are preparing debt packages of around US$1 billion or 5-6 times its US$200 million EBITDA, closed in May and binding offers are expected in July.
Goldman Sachs and Landis+Gyr declined to comment. CVC declined to comment, while Hitachi and Onex were not immediately available for comment.
Toshiba is also preparing for an initial public offering of Landis+Gyr if final bids fall short of its expectations, as the Japanese company scrambles to raise funds to cover massive losses at U.S. nuclear unit Westinghouse.
Toshiba hired UBS this year for the deal and later added Morgan Stanley, Credit Suisse and JP Morgan to help with the potential IPO.
CVC and Hitachi, whose initial preemptive offer of almost US$2 billion to buy Landis+Gyr was declined, as well as Honeywell decided not to pursue deals due to the likely valuation and the prospects of a listing, the sources said.
One of the sources said the company was aiming for offers 12 times EBITDA, which deterred many bidders.
There has been a wave of M&A activity in the metering industry. CVC is selling German metering and energy management group Ista, which could be worth up to 4.5 billion euros, while German metering group Techem could be put up for sale this year.
Toshiba bought Landis+Gyr in 2011 for US$2.3 billion jointly with state-backed Innovation Network Corp of Japan, which holds the remaining 40 percent in the company.
Landis+Gyr, in which Toshiba has a 60 percent stake, employs more than 5,700 staff and is active in over 30 countries.
Update: Onex in May announced it had begun fundraising for its fifth flagship private equity fund. Onex Partners V‘s target was set at US$6.5 billion.
By Clara Denina , Claire Ruckin and Arno Schuetze
(Additional reporting by Oliver Hirt in Zurich; Editing by Susan Thomas)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Arnd Wiegmann