SL Power adds a complementary portfolio of power conversion
products and solutions for medical and advanced industrial
applications
Advanced Energy (Nasdaq: AEIS) – a global leader in highly
engineered, precision power conversion, measurement and control
solutions – today announced that it has entered into a definitive
agreement to acquire SL Power Electronics Corporation, a leading
provider of customized power solutions for medical and advanced
industrial applications, from Steel Partners Holdings L.P. (NYSE:
SPLP). The acquisition expands Advanced Energy’s medical power
solution offerings by adding a complementary portfolio of products
and improves its ability to meet the growing needs of industrial
and medical customers.
Headquartered in Calabasas, California, SL Power is a leading
supplier of power conversion solutions for medical and advanced
industrial applications. With more than 60 years of experience in
the power industry, SL Power offers leading medical and advanced
industrial original equipment manufacturers (OEMs) an extensive
portfolio of standard, modified standard and custom solutions with
superior performance that meet the stringent requirements of
mission critical applications.
“The addition of SL Power expands our offerings for industrial
and medical applications,” said Steve Kelley, President and CEO of
Advanced Energy. “I believe SL Power’s strong customer base,
complementary product portfolio, and highly skilled team make it an
ideal fit for Advanced Energy.”
Strategic Benefits
- Expands AE’s addressable market in industrial and medical power
supplies by over $400 million.
- Complements AE’s medical portfolio with low operating power,
low emission (EMI/EMC) power supplies designed for use in
FDA-certified Class-II and Class-III medical equipment.
- Broadens AE’s reach in advanced industrial applications,
including specialty lighting and test and measurement.
- Delivers significant potential revenue and cost synergies by
creating cross-selling opportunities and integrating SL Power into
AE’s operations.
- Enhances AE’s core competency in power conversion
technologies.
- Expected to be accretive to non-GAAP 2022 earnings.
Terms of the Definitive Agreement
Pursuant to the terms of the Stock Purchase Agreement, AE will
pay a base purchase price of $144.5 million, on a cash-free,
debt-free basis and subject to a customary adjustment for working
capital as of the closing. Advanced Energy expects to finance the
transaction with currently available cash.
For its fiscal year ending December 2021, SL Power generated
$66.0 million in revenue.
The transaction has been approved by the Board of Directors of
Advanced Energy. The transaction is expected to close during the
second quarter of 2022 and is subject to customary closing
conditions. Advanced Energy is advised in the transaction by
Evercore as exclusive financial advisor and Foley & Lardner LLP
as legal counsel.
About Advanced Energy
Advanced Energy (Nasdaq: AEIS) is a global leader in the design
and manufacturing of highly engineered, precision power conversion,
measurement and control solutions for mission-critical applications
and processes. AE’s power solutions enable customer innovation in
complex applications for a wide range of industries including
semiconductor equipment, industrial, manufacturing,
telecommunications, data center computing and healthcare. With
engineering know-how and responsive service and support around the
globe, the company builds collaborative partnerships to meet
technology advances, propel growth for its customers and innovate
the future of power. Advanced Energy has devoted four decades to
perfecting power for its global customers and is headquartered in
Denver, Colorado, USA. For more information, visit
www.advancedenergy.com.
Advanced Energy | Precision. Power. Performance.
Non-GAAP Measures
Advanced Energy’s non-GAAP measures exclude the impact of
non-cash related charges such as stock-based compensation and
amortization of intangible assets, as well as discontinued
operations, and non-recurring items such as acquisition-related
costs and restructuring expenses. Beginning in the second quarter
of 2020, Advanced Energy’s non-GAAP measures exclude non-cash
unrealized foreign currency gains or losses that result from
remeasurement to functional currency long-term obligations related
to pension and operating lease liabilities as the remeasurement
does not represent current economic exposure and is unrelated to
our overall operating performance. These long-term obligations were
acquired in connection with the Artesyn acquisition and the company
previously used derivatives to hedge the exposure; however, the
company has determined it will no longer hedge these non-economic
exposures. The tax effect of our non-GAAP adjustments represents
the anticipated annual tax rate applied to each non-GAAP adjustment
after consideration of their respective book and tax
treatments.
The non-GAAP measures included in this release are not in
accordance with, or an alternative for, similar measures calculated
under generally accepted accounting principles and may be different
from non-GAAP measures used by other companies. In addition, these
non-GAAP measures are not based on any comprehensive set of
accounting rules or principles. Advanced Energy believes that these
non-GAAP measures provide useful information to management and
investors to evaluate business performance without the impacts of
certain non-cash charges, non-economic foreign currency
remeasurements, and other cash charges which are not part of the
company’s usual operations. The company uses these non-GAAP
measures to assess performance against business objectives, make
business decisions, develop budgets, forecast future periods,
assess trends, and evaluate financial impacts of various scenarios.
In addition, management’s incentive plans include these non-GAAP
measures as criteria for achievements. Additionally, the company
believes that these non-GAAP measures, in combination with its
financial results calculated in accordance with GAAP, provide
investors with additional perspective. While some of the excluded
items may be incurred and reflected in the company’s GAAP financial
results in the foreseeable future, the company believes that the
items excluded from certain non-GAAP measures do not accurately
reflect the underlying performance of its continuing operations for
the period in which they are incurred. The use of non-GAAP measures
has limitations in that such measures do not reflect all of the
amounts associated with the company’s results of operations as
determined in accordance with GAAP, and these measures should only
be used to evaluate the company’s results of operations in
conjunction with the corresponding GAAP measures.
Forward-Looking Statements
Statements in this press release regarding the proposed
transaction among Advanced Energy, SL Power Electronics and Steel
Partners Holdings L.P., the expected timetable for completing the
transaction, future financial and operating results, benefits and
synergies of the transaction, and any other statements about
Advanced Energy’s future expectations, beliefs, goals, plans,
aspirations or prospects constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Any statements that are not statements of historical fact
(including statements containing the words "will," "projects,"
"intends," "believes," "plans," "anticipates," "expects,"
"estimates," "forecasts," "continues" and similar expressions)
should also be considered to be forward-looking statements. There
are a number of important factors that could cause actual results
or events to differ materially from those indicated by such
forward-looking statements, including: (1) the ability to
consummate the transaction; (2) risks that the conditions to the
closing of the transaction are not satisfied; (3) litigation
relating to the transaction; (4) the ability of Advanced Energy to
successfully integrate SL Power Electronics' operations and
employees; (5) unexpected costs, charges or expenses resulting from
the transaction; (6) risks that the proposed transaction disrupts
the current plans and operations of Advanced Energy and SL Power
Electronics; (7) the ability to realize the projected revenue,
addressable market, synergy, earnings, EPS, margin expansion, cost
savings and de-levering estimates and goals as described in the
investor presentation; (8) competition from larger and more
established companies in SL Power Electronics’ markets; (9)
Advanced Energy’ s ability to successfully grow SL Power
Electronics’ business; (10) potential adverse reactions (including
customer reaction) or changes to business relationships resulting
from the announcement or completion of the transaction; (11) the
retention of key employees; and (12) legislative, regulatory,
tariff and economic developments, including changing business
conditions in the medical and industrial power supply industry
overall and the economy in general, as well as financial
performance and expectations of Advanced Energy’s and SL Power
Electronics’ existing and prospective customers, and the other
factors described in Advanced Energy’s Annual Report on Form 10-K
for the year ended December 31, 2021 and its most recent quarterly
reports filed with the SEC. Advanced Energy disclaims any intention
or obligation to update any forward-looking statements as a result
of developments occurring after the date of this press release.
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version on businesswire.com: https://www.businesswire.com/news/home/20220404005270/en/
Edwin Mok Advanced Energy Industries, Inc. (970) 407-6555
ir@aei.com
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