Advanced Energy to Acquire Artesyn Embedded Power
- Creates a $1.3 billion premier power conversion company with global presence and scale across critical technologies and markets.
- Expands AE’s addressable market by 3x through the addition of new growth verticals.
- Targets annualized synergies of over
$20 millionin 18-24 months and over $40 millionlong-term.
- Expected to be immediately accretive to non-GAAP EPS and to accelerate projected earnings growth.
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
Compelling Strategic Benefits:
- Creates a premier global power conversion company with enabling critical power technologies and over
$1.3billion in annual revenue, based on 2018 combined historical results.
- Triples AE’s addressable market to
$7.5 billionby 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 millionof expected annualized synergies, driving projected earnings accretion of over $0.80per share in 18-24 months and targeting to reach long-term accretion of over $1.50per 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
Terms of Agreements
Under the terms of the Share Purchase Agreement, based on a total base purchase price of
The transaction only involves Artesyn’s
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.
Advanced Energy is advised in the transaction by Evercore as exclusive financial advisor and Foley & Lardner LLP as legal counsel. JP Morgan is serving as primary financial advisor to Artesyn.
Conference Call and Webcast Information
Management will host a conference call on
About Advanced Energy
Advanced Energy | Precision. Power. Performance.
For more information, contact:
Advanced Energy Industries, Inc.
+1 (970) 407-6555
Non-GAAP and Adjusted Financial 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, minority interest, and non-recurring items such as acquisition-related costs and restructuring expenses. The non-GAAP measures 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 and other 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. Please refer to the Form 8-K regarding this release furnished today to the
Artesyn EP’s adjusted financial measures, including Adjusted EBITDA, Adjusted Operating Income and Adjusted Operating Margins, exclude the impact of non-cash related charges such as amortization of intangible assets, as well as restructuring expenses, one-time optimization and integration expenses, other income and deductions, management fees to private equity owners of Artesyn, and other non-cash charges. Advanced Energy and Artesyn believe that Artesyn EP's adjusted financial measures are relevant and useful information for the companies and investors to evaluate Artesyn EP’s past performance and enterprise value, without the impacts of certain non-cash charges and other charges which are not part of the company’s usual operations. Expected synergies and projected earnings accretion stated above are projections based on combination of Advanced Energy’s non-GAAP financial measures and Artesyn EP’s adjusted financial measures. Neither Advanced Energy nor Artesyn has begun a reconciliation of Artesyn EP’s adjusted financial measures to Advanced Energy’s non-GAAP measures, and therefore cannot quantify the differences, which may be material. In addition, Advanced Energy will account for the acquisition under the purchase method of accounting, which could result in a new valuation for the assets and liabilities of Artesyn EP. Advanced Energy will not be preparing any pro forma information for the acquisition and financing until the reconciliation and valuation estimates have been prepared.
Statements in this press release regarding the proposed transaction between Advanced Energy,
Source: Advanced Energy Industries, Inc.