Orange Is Looking For Deals Outside of Telecom, Including IstaBy , , and
French operator decided against bid for German meter company
Price pressure in France has hurt Orange’s sales growth
Orange SA is looking for European acquisitions outside of telecommunications that could cost as much as several billion euros, and recently considered buying German metering company Ista International GmbH, according to people close to the matter.
The French company held talks with Ista’s majority owner, private equity firm CVC Capital, about the business, which could fetch as much as 5 billion euros ($5.7 billion) including debt, according to the people, who asked not to be identified because the process is confidential. While Orange decided in recent days against making an offer, the people said, the deliberations illustrate the phone company’s appetite to expand in business services and web-connected devices.
Ista’s electricity- and water-metering business would have complemented Orange’s “smart building” products that use its network to help offer power management, surveillance and reception services in apartments. Chief Executive Officer Stephane Richard is seeking growth outside of telecom because Orange has faced pressure on wireless prices for years in France, one of Europe’s most competitive markets. European regulations also have eaten into roaming revenue in the region.
Orange, which has a market value of 37.3 billion euros, raised more than 1 billion euros in cash this month as it cut its stake in U.K. phone carrier BT Group Plc and issued bonds convertible into BT shares. The French company is seeking to expand its Orange Business Services unit which has activities in information-technology services, the Internet of Things and data analytics, people said.
Orange is open to paying for a potential deal in part with shares, one of the people said. The company has screened potential acquisitions but hasn’t made any offers yet, the person said.
Ista has received takeover offers from bidders including Blackstone Group LP, CK Infrastructure Holdings Ltd. and the Ontario Teachers’ Pension Plan Board, people familiar with the matter said this month.
An Orange representative said the company isn’t bidding for Ista and had no further comment. The company “is maintaining a policy of selective, value-creating acquisitions by concentrating on markets in which it is already present,” it said in an April 27 earnings release.
A representative for CVC declined to comment. Ista declined to comment on possible interest from Orange and said its shareholders are evaluating options.
Ista specializes in heat and water meters for apartment buildings and commercial properties, and uses technology to help customers monitor and reduce energy use and maintain smoke alarms remotely. The company had sales of 850.4 million euros from about 12 million customers last year, according to its website.
The European Union has set a target to replace at least 80 percent of electricity meters with smart meters by 2020 in a drive to reduce emissions, a project representing potential investments of 45 billion euros.
— With assistance by Geraldine Amiel, and Stefan Nicola