The strategic transaction will significantly expand Vertiv's offering
Vertiv, a global provider of critical digital infrastructure solutions, announced that it has reached a definitive agreement to acquire E&I Engineering Ireland Limited and its affiliate Powerbar Gulf LLC (“E&I”) for an approximate consideration of $1.8 billion up front, plus a potential up to $200 million based on the achievement of 2022 interim revenue targets. The upfront payment consists of $1,170 million and common stock of Vertiv for approximately 630 million dollars. The transaction was unanimously approved by Vertiv's Board of Directors. Its closure is expected in the last quarter of 2021, subject to customary closing conditions.
Founded in 1986 by Philip O'Doherty, E&I is an independent supplier of electrical systems and distribution systems, pioneering the design of one-of-a-kind integrated power supply solutions and technologies tailored to individual customer needs and projects. With annual revenue of approximately $460 million (2021 estimate) and 2,100 employees, E&I has a long tradition in the energy distribution market and strong relationships with a customer base of publicly traded companies in more than 30 countries. E&I products represent an important component for data center power infrastructure and compete in a market worth approximately $7 billion which is expected to grow 5% annually through 2025.
“The acquisition of E&I represents a key step in Vertiv's strategy as it allows us to complete our portfolio of electrical infrastructure offerings for data centers and expand our presence in important commercial and industrial markets,” he commented Rob Johnson, Chief Executive Officer di Vertiv. "The union between the two companies will amplify Vertiv's growth and profit opportunities, allowing us to offer differentiated solutions to manage the customer's entire electrical infrastructure as an integrated system. We look forward to adding the highly professional E&I specialists to the Vertiv family. Both our companies share a consolidated culture of engineering excellence and innovation and a great passion for offering customers increasingly innovative products and services."
"Although this deal marks Vertiv's first acquisition since becoming a publicly traded company, our team carefully followed acquisition best practices during the identification, evaluation, due diligence and integration planning process. E&I represents a unique opportunity for Vertiv and fits perfectly into its portfolio. I am excited by the potential of these two great businesses coming together to become one entity," he said. Dave Cote, Executive Chairman di Vertiv.
“This transaction brings together two highly complementary businesses and represents a great step for E&I employees and customers,” he commented Philips O. “We are excited to join the Vertiv team and continue to grow our business through its global reach, strong market presence and strong customer positioning in the critical digital infrastructure sector.”
Strategic and financial benefits
- Highly complementary product portfolio with differentiated technologies. E&I products in the range of critical electrical systems, UPS input and output switches and busways complete Vertiv's offering for critical electrical infrastructures.
- Large global customer base. Together, Vertiv and E&I will serve some of the world's leading hyperscale cloud and colocation services companies who are increasingly seeking partners who can provide comprehensive electrical infrastructure and flexible power distribution options to support growing demand for energy needs.
- Significant geographic expansion potential. E&I today operates in North America, Europe and the Middle East. This transaction provides the opportunity to leverage Vertiv's presence outside the United States, particularly in Europe and Asia, to quickly reach new customers.
- Advantageous synergies between costs and revenues. Excellent commercial synergies are expected from the union between the two companies: a potential not currently incorporated into the financial model. Vertiv expects to realize, within three years of closing, approximately $18 million in pre-tax cost synergies from a combination of supply, general, administrative and manufacturing costs. Revenue synergy opportunities instead relate to complementary customers and products, to support cross-selling and integrated solutions.
- Growth of Vertiv's financial profile. The transaction is expected to increase Vertiv's organic growth, operating margins, cash flow and earnings per share in 2022.
