Advanced Energy completes acquisition of Artesyn Embedded Power

Wednesday September 11, 2019 0 comments Tags: Fort Collins, Advanced Energy, Yuval Wasserman, Artesyn Embedded Power

FORT COLLINS -- Advanced Energy Industries, Inc. (Nasdaq: AEIS) announced it completed the previously announced acquisition of Arizona-based Artesyn Embedded Technologies’ Embedded Power business.

With this highly strategic acquisition, Advanced Energy said it becomes a highly diversified, pure play power house with a global platform for accelerated earnings growth.

“Today marks a new chapter for Advanced Energy as we embark on the next phase of our diversification and growth strategy by adding broad sets of markets and industry-leading technologies,” said Yuval Wasserman, AE’s president and CEO.

“With integration efforts already started, the new AE management team, with the addition of Dana Huth who leads the Artesyn Embedded Power business, is well prepared to deliver long-term, profitable and sustainable growth.”

According to AE, strategic benefits of the acquisition include:

  • Creation of 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.
  • Tripling of AE’s addressable market to $7.5 billion by adding new attractive growth verticals in hyperscale data center, 5G wireless, industrial and medical technologies.
  • A solid strategic fitwith highly complementary technologies, product portfolios and core competencies in highly engineered, application-specific power solutions for key OEMs in demanding applications.
  • Acceleration of earnings growth, driving projected annualized 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.
  • Creation of 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.

“We are encouraged by the positive reaction to this acquisition by both the market and our customers. The added capabilities and expertise of the Artesyn team will allow AE to better meet our customers’ needs,” said Wasserman.

“On behalf of the entire Artesyn Embedded Power team, we are excited to be playing a key role in this new chapter for Advanced Energy,” said Dana Huth.

“I look forward to leading the Artesyn Embedded Power organization as together with Advanced Energy, we create a premier power conversion company developing power solutions that our customers depend on for mission-critical applications.”

Under the terms of the share purchase agreement, the total consideration for this acquisition was approximately $400 million. Advanced Energy paid approximately $375 million in cash at closing and assumed approximately $25 million in net liabilities, including estimated adjustments for net working capital and acquired cash.

In conjunction with this transaction, AE completed the previously-announced credit financing, consisting of $350 million of a senior unsecured term loan A facility and an untapped $150 million senior unsecured revolving facility, before any fees, led by Bank of America, N.A., with commitments from HSBC Bank USA, N.A., Bank of the West and Citibank, N.A.

The acquisition of Artesyn Embedded Power is expected to be immediately accretive to earnings on a non-GAAP basis and generate over $20 million of annualized synergies within 18-24 months and $40 million of total synergies long-term.

In 2018, revenues for Artesyn Embedded Power were approximately $593 million and adjusted EBITDA was approximately $55 million.