Bentley Systems, Incorporated (Nasdaq: BSY) announced that it has entered into a definitive agreement to acquire Power Line Systems-a player in software for the design of overhead electric power transmission lines and their structures-from private equity firm TA Associates for approximately $700 million. The consideration is payable, at BSY's election, in cash or a combination of cash and BSY stock. As an established subscription business with no full-time go-to-market staffing, Power Line Systems generates extraordinary profitability and cashflow, and accordingly, the acquisition is expected to be accretive to BSY's corresponding financial metrics.
The combination will complete the reach of BSY's portfolio for the lifecycle integration of grid infrastructure across electrical transmission, substation, and distribution assets, and communications towers. The resulting breadth and depth of the company's software and cloud services for grid integration will position BSY to support the modernization of grid infrastructure for renewable energy sources and storage, mobility electrification, ubiquitous broadband and 5G communications, and environmental resilience and adaptation.
Bentley Systems' recently developed OpenTower iQ cloud service is generating impactful new business growth by meeting the new demands of communications tower owners for lifecycle digital twins of their existing towers. Tower digital twins leverage UAV-surveyed reality modeling, machine learning, and asset performance modeling to help maximize these assets' capacity, revenue, safety, and reliability while minimizing costs and risks of work on site. BSY's new Grid Integration Group can now expand this opportunity to existing power transmission towers, where reliability, safety, and fitness for purpose are stressed by deterioration, weather extremes, and vegetation encroachment.
By bringing together Power Line Systems' products (for transmission) with OpenUtilities Substation and SPIDA (for distribution) and OpenTower (for communications) and OpenUtilities Designer and OpenComms (for network provisioning), Bentley Systems' grid integration and digital twin offerings will span virtually all physical grid structures, lines, and networks at the same time as these are becoming increasingly shared by utilities for multiple purposes.
BSY expects the Power Line Systems business to be able to contribute in 2022:
approximately $30 million of subscription revenue
accretion in its overall ARR growth rate
profitability consistent with its history of EBITDA margins more than twice BSY's.
Despite not to date having any transmission market offerings, Bentley Systems has been ranked by ARC Advisory Group as leading its broader grouping of Electrical Transmission and Distribution, and Communications within Engineering Design Tools for Plants, Infrastructure, and BIM.
The acquisition is subject to customary closing conditions, including HSR Act notification. Upon closing, Power Line Systems will operate within Bentley's new Grid Integration Group, combining also its SPIDA analysis products and startup OpenTower business.