Echelon Corp. signed a definitive agreement to sell its grid operations to S&T AG, a publicly traded European IT systems provider with an existing focus on smart grid products and services.
The closing is conditioned upon regulatory approvals. The companies expect the deal to close by the end of the year.
Under the terms of the agreement, Echelon will receive about $5 million in upfront consideration, dependent in part on the value of net assets at closing. After fees, expenses, and restructuring charges are considered the company expects the net benefit to be nominal.
Echelon will also become a supplier of its narrowband high-reliability power line communications chips to S&T for use in their smart meters and related products. Echelon will receive future benefits in the form of revenue from the purchase of these products, as well as rental income and potential performance-based consideration of up to $1 million.
As part of the transaction about 60 current Echelon employees are expected to join S&T. The acquisition is anticipated to be accomplished via a unit established by S&T.
S&T is committed to supporting the Open Smart Grid Protocol (OSGP), which Echelon has helped spearhead, and to join other OSGP partners in support of this standard for the control of smart grids. S&T also plans to partner with members of the Grid Modernization VAR program, adding the S&T product portfolio to expand the number of products and services the program can offer.