Activist Spectrum has a stake in Landis+Gyr, and it may be poised to build value

Enterprise: Landis+Gyr Group is a Switzerland-based firm primarily engaged within the electrical parts and tools manufacturing enterprise. It makes a speciality of metering options for electrical energy, gasoline, warmth/chilly and water for vitality measurement options for utilities. Landis+Gyr product portfolio consists of superior metering and clever vitality administration merchandise, reminiscent of electrical energy meters, heating and cooling meters, grid administration options and private vitality administration options. As well as, the corporate gives numerous software program providers, managed providers, cloud providers, sensible grid providers, methods integration, coaching, in addition to consulting and assist providers.

Inventory Market Worth: roughly 1.49B Swiss francs (CHF 51.60 per share)

Possession: 5.01%

Common Price: n/a

Activist Commentary: Spectrum Entrepreneurial Possession (“search engine optimisation”) manages a concentrated portfolio of huge minority investments, sometimes six to eight positions, in listed European corporations with a concentrate on the DACH area (Germany, Austria and Switzerland). As a long-term and engaged anchor shareholder, search engine optimisation strives to unleash its portfolio corporations’ full worth potential. The agency targets small and mid-cap corporations with a number of catalysts for worth creation and prioritizes amicable engagement, sometimes sitting on the board of a lot of the corporations the place they’ve engagements. The fund’s steady capital base stems from household places of work, endowments, pension funds, and different long-term institutional traders. search engine optimisation was co-founded in 2022 by Fabian Rauch and Dr. Ilias Läber. The 2 principals have a mixed 4 a long time of board expertise in listed corporations and every beforehand labored at Cevian Capital for roughly a decade.

Landis+Gyr is a Switzerland-based main world supplier of built-in vitality administration options, specializing in superior metering infrastructure and sensible grid applied sciences. Utilities and vitality suppliers make the most of Landis’ portfolio of sensible metering tech, sensors, software program and providers to modernize and enhance the effectivity of their infrastructure. Whereas Landis is a really previous firm, based in 1896, it was privately owned and invested in by a collection of strategic and monetary traders for a lot of its historical past. In 2011, Toshiba acquired a 60% stake within the firm for U.S. $2.3 billion, however finally opted to IPO the Swiss unit six years later. It started buying and selling on the SIX Swiss Trade on July 21, 2017, at 78 Swiss francs (CHF) per share, implying a market cap of CHF 2.3 billion.

At the moment, Landis is buying and selling effectively under its IPO worth, down over 35%. It’s also considerably undervalued, buying and selling round 7.5-times enterprise worth/EBITDA, in comparison with its Nasdaq-listed pure-play peer Itron (roughly 15-times) with which it functionally has a duopoly in the USA, every controlling 35% to 40% of the market. In July 2024, search engine optimisation acquired a 5% curiosity in Landis from Kirkbi, changing into the second largest shareholder. Shortly after, Landis requisitioned a unprecedented normal assembly to elect to the board Fabian Rauch, co-founder and managing companion of search engine optimisation, in August 2024. Two months later, on Oct. 30, 2024, the corporate introduced a strategic evaluate of its enterprise portfolio which incorporates the next key parts: (i) rising concentrate on its Americas enterprise; (ii) reviewing worth creation alternatives for its Europe, Center East and Africa (EMEA) enterprise; and (iii) evaluating a possible change in itemizing location to the USA. Nevertheless, a number of issues have despatched the inventory worth down since then, together with Landis lowering its FY24 income steerage by 8% and the announcement that it’ll exit its electrical automobile charging enterprise in EMEA, leading to anticipated impairment costs of $35 million to 45 million. Relating to the discount of steerage, regardless of Landis frequently messaging that post-Covid development was unsustainable on account of pent-up demand, the warnings fell on deaf ears. Shares fell practically 22% on Feb. 11, 2025, the date of the announcement.

Specializing in the Americas makes a number of sense. Landis generated $1.963 billion of income from three geographic segments: Americas (58%), EMEA (34%), and Asia-Pacific (8%). Regardless of EMEA contributing a 3rd of income, it delivered simply 8% of adjusted earnings earlier than curiosity, taxes, depreciation and amortization, much less EBITDA than its considerably smaller Asia-Pacific unit. Exploring further potentialities for development within the Americas and winding down its EMEA enterprise by way of both a sale or spinoff of this enterprise may very well be extremely accretive to shareholder worth. A change in itemizing location, more likely to a U.S. alternate, would additionally make sense contemplating that this Swiss firm is producing most of its income within the area. This can be a technique which Cevian pushed for at each CRH and Pearson, and it has been a preferred activist catalyst in Europe in recent times.

Landis is a narrative of a failed fairness with considerably of an insular board. Welcoming Fabian Rauch was the primary sturdy sign that the board needed change. Saying a value-creating plan shortly thereafter was the second sign. The third occurred in November 2024, when the corporate changed CEO Werner Lieberherr with Peter Mainz. Lastly, the fourth sign occurred in January 2025 when the corporate introduced that its chairman Andreas Umbach is not going to stand for re-election and might be changed by Audrey Zibelman.

Ken Squire is the founder and president of 13D Monitor, an institutional analysis service on shareholder activism, and the founder and portfolio supervisor of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.