As announced by Maxwell Technologies, Inc. as part of the recent earnings announcement, Maxwell and Nesscap Energy Inc. have entered into an agreement in which Maxwell proposes to acquire substantially all of the assets and business of Nesscap. Maxwell will purchase the operating entities of Nesscap for a total purchase price of $23.175 million, or about 1.1 times annualized revenue based on Nesscap's 9-month revenue ended September 30, 2016.
The purchase price will be paid by the issuance of approximately 4.6 million Maxwell shares, subject to a 10% upward or downward adjustment based on the average closing price of Maxwell shares for the 10 consecutive trading days ending two days prior to closing.
Each of Maxwell's and Nesscap's board of directors has unanimously approved the Transaction. In approving the Transaction, Nesscap's Board of Directors has received a verbal fairness opinion from its financial advisor, Paradigm Capital Inc., stating that the consideration to be received by Nesscap is fair from a financial point of view to Nesscap and it expects to receive the written fairness opinion in connection with the mailing of a circular to its shareholders.
As a market leader in innovative small cell format ultracapacitor products and technologies, Nesscap provides research, development and manufacturing of energy storage and power delivery solutions that complement Maxwell's large cell format ultracapacitor product portfolio, with operations in Korea, Germany, and China. Maxwell expects to capitalize on synergies between the two companies that will accelerate top-line growth and earnings, increase the innovation rate, and create an expanded and strengthened product portfolio. With a strengthened sales channel, increased R&D capabilities, and improved manufacturing efficiencies, Maxwell will be able to deliver more products, faster into target markets thereby benefitting customers and other technology adopters.
Key benefits of the transaction include: Expanded and solidified opportunity in Wind, Automotive, and Industrial Markets - In wind pitch control, the Transaction creates a leading-edge product portfolio including a full range of competitive small cell and large cell offerings. With respect to the automotive market, the acquisition brings pre-existing design wins and revenue in back-up power and extends Maxwell's reach in the market. Moreover, small cell-based product solutions also broaden opportunities in the rapidly growing industrials market. Nesscap already has a solid position in this market with a strong base in Europe, which adds revenue diversity and creates further opportunities for growth.
Accelerated innovation and product time to market with an expanded portfolio - Emerging from strong customer traction and product launches by both companies in 2016, the combination increases scale and leverages R&D to deliver additional new, differentiated products faster. The enhanced R&D team, along with a strengthened global sales channel, accelerates product, technology, and cost innovations into key markets.
Improved small-cell competitiveness through cost structure improvement - Margin expansion is anticipated from economy of scale and materials cost savings, a streamlined supply chain, and gains in operational efficiency from combined manufacturing.
Accretive growth with positive financials and product/customer synergies - The transaction is expected to be immediately accretive to Maxwell's non-GAAP earnings per share following close, which is anticipated to be in Q2 of 2017, and Maxwell expects the Nesscap business to deliver positive adjusted EBITDA in 2017.
"With the acquisition of the Nesscap business, Maxwell will be stronger and better equipped to help existing and new customers address the growing demand for advanced ultracapacitor solutions to improve energy efficiency and meet government mandates for reduced emissions," said Dr. Franz Fink, Maxwell's president and CEO. "Our highly complementary product portfolio and development pipeline will address these challenges and likewise enable our customers to continuously innovate and deliver in their key markets over the years to come."
"Maxwell and Nesscap share the vision that ultracapacitor technology, with its clear advantages in power, lifetime, and temperature performance, will continue to advance and gain share in an increasing number of applications," said Jim Zuidema, CEO of Nesscap. "This acquisition will enable us to accelerate fulfillment of that vision, combining two exceptional teams, and move faster to bring more breakthrough products to markets which are hungry for scalable and efficient energy solutions."
