$90M Acquisition of PV Powered Signals Uptick in Cleantech M&A Market
[Updated 4:00 pm, 3/25/10. See below.] Bend, OR-based PV Powered, a maker of solar energy components, announced yesterday it is being acquired by Advanced Energy Industries of Fort Collins, CO. The deal will be worth as much as $90 million—$50 million upfront ($35 million in cash and $15 million in Advanced Energy’s common stock), and up to $40 million in earn-out pay based on PV Powered’s 2010 sales.
The acquisition shows how solving a relatively small but crucial piece of the solar energy puzzle can pay off in spades, even in a difficult economy. PV Powered makes solar power inverters, which are electronic components that help convert the DC electricity output of solar cells into AC current that homes and businesses can use.
At least one cleantech industry observer thinks the acquisition—and more specifically, its size—signifies a resurgence of the mergers and acquisitions market in alternative energy. Michael Butler, the CEO and co-founder of Seattle-based Cascadia Capital, calls the Oregon company’s sale a “big deal” at a “huge price.”
“It tells me that M&A premiums are coming back,” Butler says in an e-mail. “Traditionally, balance of systems companies such as inverter companies trade at 1x revenue. This is more than 1x revenue. We are seeing M&A coming back big time in the alt energy /clean tech markets. This is another data point… and a good one.”
Gregg Semler, co-founder and managing director of Portland, OR-based Pivotal Investments, seems to agree. “Corporates have cash and a growing need to differentiate themselves with proprietary technology that can build their leadership in renewable energy,” he says. “This acquisition by Advanced Energy shows the increasing demand for growing companies that have innovative technologies focused on solar energy. I think we will see lots more this year.” [This paragraph was added for further analysis—Eds.]
PV Powered, founded in 2003, said it will operate under its current management team as a wholly-owned subsidiary of Advanced Energy Industries, and will continue to sell its inverters out of Bend. The company has about 90 employees and made $21 million in revenue in 2009.
In a statement, PV Powered CEO Gregg Patterson said his employees are “excited” to join Advanced Energy Industries, and implied the cultural fit is a good one. “Both organizations share a common mission to deliver the innovations our customers are asking for in efficiency, reliability and uptime that will maximize the 20+ year financial returns of solar projects,” he said.
Advanced Energy Industries (NASDAQ GM: AEIS) says it expects PV Powered to contribute $40 to $50 million in revenues this year, the majority of which will come from businesses, not residences. Advanced Energy makes a wide range of solar components, including inverters, but also other power systems and thin-film semiconductor technologies for large solar power plants.