Acquisitions & Mergers, Embedded Systems, Energy Measurement, Wireless
@AdvEnergy @ArtesynEmbedded #powerconversion #powersupplies #psd
FORT COLLINS, Colo. -- Advanced Energy Industries, Inc. announced that it has entered into a definitive agreement to acquire the Embedded Power business of Artesyn Embedded Technologies, Inc. (Artesyn EP) from Platinum Equity. The total consideration for this transaction will be approximately $400 million.
Artesyn EP is one of the world’s largest providers of highly engineered, application-specific power supplies for demanding applications. As a trusted technology partner to original equipment manufacturers (OEMs), it serves multiple attractive growth markets, including hyperscale data centers, telecom infrastructure in next generation 5G networks, embedded industrial power applications and medical power for diagnostic and treatment applications.
“We are excited by this highly strategic acquisition of Artesyn EP, transforming Advanced Energy into a highly diversified, pure-play power house with a global platform for accelerated earnings growth,” said Yuval Wasserman, president and CEO of Advanced Energy.
Compelling Strategic Benefits:
•Creates a premier global power conversion company with enabling critical power technologies and over $1.3 billion in annual revenue, based on 2018 combined historical results.
•Triples AE’s addressable market to $7.5 billion by adding new attractive growth verticals in hyperscale data center, 5G wireless, industrial and medical technologies.
•Strong strategic fit with complementary technologies, product portfolios and core competencies in highly engineered, application-specific power solutions for key OEMs in demanding applications.
•Broadens and diversifies Advanced Energy into multiple, stable growth verticals and customers.
•Accelerates earnings growth with over $20 million of expected annualized synergies, driving projected earnings accretion of over $0.80 per share in 18-24 months and targeting to reach long-term accretion of over $1.50 per share, on a non-GAAP basis.
•Creates significant financial value with a purchase price of approximately 5x synergy-adjusted EBITDA, with a path to future margin expansion, additional cost savings and de-levering to create long-term shareholder value.
“Artesyn EP fits perfectly into our diversification strategy by adding a broad set of new growth verticals, industry leading power technologies, deep customer relationships and a world-class team. AE’s semiconductor customers will also benefit from the expanded capabilities, broadened product offerings and increased stability and scale. With the anticipated immediate accretion and future synergies of this acquisition, we are positioning AE for accelerated profitable and sustainable growth,” added Wasserman.
“We believe our Embedded Power business will substantially benefit from the combination with Advanced Energy,” said Jay Geldmacher, CEO of Artesyn Embedded Technologies. “Together with AE, we form a consolidated platform with a synergistic and complementary product portfolio, which expands our industrial business into semiconductor markets and provides our existing customers access to new technologies. Our combined core competencies, innovation and operational infrastructure can generate profitable growth, creating value for all stakeholders.”
Terms of Agreements
Under the terms of the Share Purchase Agreement, based on a total base purchase price of $400 million, Advanced Energy will pay approximately $364 million in cash and assume approximately $36 million of liabilities for Artesyn EP, subject to final adjustments to the valuation of such liabilities and adjustments to reflect working capital as of the closing. AE expects to finance the transaction through a combination of existing cash and $350 million of debt supported by commitments from its lenders.
The transaction only involves Artesyn’s Embedded Power business, which includes the Artesyn and Astec brands. Artesyn’s Embedded Computing and Consumer Products businesses are not included in this transaction. Artesyn EP is a leading global supplier and manufacturer of highly engineered power conversion products, including AC-DC power supplies, DC input devices and board mounted DC-DC modules. The Artesyn and Astec brands are well-known as two of the world’s leading brands in power conversion products.
Timing and Approvals
The transaction has been approved by the Board of Directors of Advanced Energy. The transaction, which is expected to close during the second half of 2019, is subject to the satisfaction of customary closing conditions, including receipt of international regulatory approvals and completion of certain carve out activities involving Artesyn’s Embedded Computing and Consumer Products businesses.