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Xylem Buys Sensus To Establish Base For Future Growth

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Xylem Inc. (NYSE: XYL) reached a definitive agreement to buy Sensus for about $1.7 billion in cash. The company believes the acquisition would provide a foundation for future growth besides creating value. The company expects the transaction to be completed in the December quarter of the current year.

Sensus provides smart meters, advanced data analytics, and network technologies for the water, electric and gas industries. In fiscal 2016, the company generated adjusted revenue of $837 million and adjusted EBITDA of $159 million.

Xylem indicated the valuation was based on adjusted EBITDA for the fiscal year 2016 ended in March and sees opportunity to save a minimum of $50 million in annual expenditures over a three-year period. The company expects the deal to be accretive to its adjusted earnings from next fiscal year 2017.

The company's President and CEO, Patrick Decker, commented, "This will be an important milestone in our strategy to move Xylem's portfolio of solutions up the technology curve. The combination of Xylem's world-class brands and products with Sensus' leading-edge smart technologies will create a differentiated offering that will better meet our customers' evolving needs, including greater energy efficiency, water conservation, and improved life-cycle costs."

On Friday, the stock shed $0.09, or 0.19 percent, to $48.45.

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