Itron Not Fearing Stronger Competition

Two competitors of Itron Inc. will merge this spring, but the consolidation may be good for the Spokane company, spokeswoman Mima Scarpelli said Monday.

CellNet Data Systems Inc. announced the deal with a subsidiary of Schlumberger Ltd. last Monday.

In conjunction with the transaction, California-based CellNet filed for reorganization Friday in the U.S. Bankruptcy Court in Delaware.

Scarpelli said CellNet and Schlumberger Resource Management Services each have about 10 percent of the market for automated meter-reading equipment, which Itron dominates with a 65 percent share.

But Itron has struggled with earnings in recent quarters. Scarpelli said CellNet’s efforts to build market share by cutting prices didn’t help.

“It’s tough for a company like us that is out there trying to make a decent profit,” she said. “This should bring some rationality to market pricing that there hasn’t been in the past.”

Itron and CellNet also exchanged lawsuits over patent infringements. Scarpelli said Itron prevailed on all issues except one, which the company has appealed.

Schlumberger RMS will provide interim financing for CellNet until the bankruptcy court approves the acquisition, which a CellNet statement said could happen in April.

Schlumberger RMS will also repay or assume $120 million of secured CellNet debt, as well as other liabilities. Cash in the amount of $50million will be devoted in part to payment of 14 percent senior discount notes.

Although the merger will create a stronger competitor, Scarpelli said marketing and licensing agreements between Itron and Schlumberger will not be disturbed by the CellNet deal.

The two already compete in some product lines, she said.

CellNet’s chairman is John “Mick” Seidl, a former chairman and chief executive officer of Kaiser Aluminum & Chemical Corp.

Itron will release its fourth-quarter and year-end earnings Wednesday.