The cash and shares deal adds more than £11m of revenue and thousands of new customers including Vodafone, T-Mobile and Asda to the company's books.
Its first acquisition since listing on the stock market in 2011, also positions SMS for future growth in smart metering in the domestic sector and in water metering.
SMS chief executive Alan Foy said: "We have been established since 1995 with a gas business. We provide connections, gas metering and asset installation and ownership and data collection for the gas meters. UPL were established in 1996 and they do exactly the same in electricity."
He added: "It means for customers we can provide both gas and electricity services."
SMS is paying £9.7 million in cash, funded through a new £105m credit facility with Barclays, Clydesdale Bank and Bank of Scotland.
The balance of £4.3m is being paid by issuing 1.2m shares at a price of 342.55p, the mid-price of its stock on March 14, the day before its latest financial results for 2013.
Investors reacted uncertainly. SMS's shares initially soared but a drop in late trading saw them finish the day down 4.75p or 1.2% at 405.25p.
UPL was founded by Gary Mawer a 55.4% shareholder in the business, who will retire.
Rhys Wynne, who owned 44.1% of the Welsh company, will remain with SMS as it uses UPL's 19 year-old base in Cardiff as the headquarters of its electricity metering arm. Glasgow will remain the base for its gas metering operations.
Mr Mawer, Mr Wynne and UPL managers have been given five-year share options based on personal targets and SMS's performance.
The deal adds 160 people to the existing 120-strong SMS workforce.
Mr Foy, who runs SMS alongside finance director Glen Murray, said there would not be job cuts as a result of the deal.
Mr Foy said he had known those behind the UPL business for many years and described it as a similar business to SMS before it listed on the stock market and it has a strong balance sheet.
"They are very well regarded in the utilities industry. Their culture is exactly like ours," he said.
Having the ability to offer both gas and electricity meter services could boost SMS's prospects when the roll-out of smart meters to domestic residences finally takes off, Mr Foy suggested.
SMS already has more than 400,000 meters on its books.
The acquisition could also facilitate SMS's international expansion because UPL already has a base in Italy.
SMS has previously made initial steps to building markets further afield in places including South Africa, the Philippines and the United States.
Mr Foy played down the likelihood of a spate of future acquisitions.
"You can never say never to anything. We have gas and now we are gas and electricity and we have got water. I am not on active look-out," he said.
SMS also announced the appointment of former ScottishPower executive Willie MacDiarmid as a non-executive director yesterday. As managing director of Scottish Power Energy Retail, he was part of the ScottishPower executive team that steered the company through deregulation of the UK energy market.
ScottishPower's metering business was part of his portfolio in this role.
He will chair SMS's remuneration committee.
Nigel Christie, who has been a non-executive director since in 2011, is retiring from the Board.
Paul Dollman, chairman of SMS, said: "We are delighted to welcome Willie to the Board and look forward to working with him.
"His considerable PLC experience in the energy space and with ScottishPower's metering activity will be invaluable as we grow the business in the electricity sector. "