Advanced Energy Industries, Inc. reported that it entered a definitive agreement to acquire the Embedded Power business segment of Artesyn Embedded Technologies, Inc. (Artesyn EP) from Platinum Equity.
The transaction is for Artesyn’s Embedded Power business, which includes the Astec and Artesyn brands. Artesyn’s Consumer Products and Embedded Computing businesses are not included in the acquisition.
The total compensation for the transaction will be about $400 million.
Artesyn EP is among the largest providers of application-specific power supplies for demanding applications including hyperscale data centers, telecom infrastructure in next-generation 5G networks, embedded industrial power applications, and medical power for diagnostic and treatment.
“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.
Advanced Energy Industries expects that the purchase will create a power conversion company with critical enabling power technologies and over $1.3 billion in annual revenue, based on combined historical results for 2018.
Advanced Energy Industries says that the adds new attractive growth verticals in hyperscale data center, 5G wireless, industrial, and medical technologies and triples the size of the markets the company’s products address.
The acquisition offers a strong strategic fit for the company including complementary technologies, product portfolios, and core competencies in application-specific power solutions for key OEMs. It also
It is also expected to create $20 million in annualized synergies, thereby stimulating projected earnings accretion of over $0.80 per share in 18-24 months, and Advanced Energy Industries forecasts a long-term accretion of over $1.50 per share, on a non-GAAP basis.
“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 the Agreement
Under the terms of the $400 million agreement, Advanced Energy will pay about $364 million in cash and assume about $36 million of liabilities from Artesyn EP, subject to final adjustments to the valuation of the liabilities.
AE plans to finance the transaction through a combination of existing cash and $350 million of debt supported by commitments from its lenders.
Timing and Approvals
Advanced Energy’s Board of Directors approved the transaction, which is expected to close during the second half of 2019, subject to the customary closing conditions, including the receipt of international regulatory approvals and the completion of certain carve out activities for Artesyn’s Embedded Computing and Consumer Products businesses.