Ultralife Set to Acquire Chinese Battery Maker
Ultralife Batteries Inc. has entered into a definitive agreement to acquire all of the outstanding shares of Able New Energy Co. Ltd., an established, profitable manufacturer of lithium batteries located in Shenzhen, China, for a combination of cash, common stock and stock warrants for a total value of about $4.2 million. The acquisition is expected to close in the second quarter.
Established in 2003, Able New Energy produces non-rechargeable lithium-manganese dioxide and lithium-thionyl chloride batteries, and supplies a variety of other non-rechargeable and rechargeable battery chemistries, for a wide range of applications worldwide including utility meters, security systems, tire pressure sensors, medical devices, automotive electronics and memory backup, among many others.
In 2005, based on preliminary unaudited figures, Able generated approximately $300,000 in operating profit on approximately $2.3 million in revenue. Under the terms of the agreement, the purchase price of about $4.2 million will consist of cash, common stock and stock warrants.
The cash portion of the purchase price is equal to $2.5 million with $500,000 of the cash purchase price contingent on the achievement of certain performance milestones of the acquired business. The equity portion of the purchase price will consist of 80,000 shares of Ultralife common stock and 100,000 stock warrants, for a total consideration of approximately $1.7 million. Ultralife anticipates that this acquisition will be accretive in 2006.
"With more than 50 products, including a wide range of lithium-thionyl chloride and lithium-manganese dioxide batteries and coin cells, this acquisition broadens our expanding portfolio of high-energy power sources, enabling us to further penetrate large and emerging markets such as remote meter reading, RFID and other markets that will benefit from these chemistries," said John D. Kavazanjian, president and chief executive officer. "In addition, this acquisition will strengthen Ultralife's global presence, facilitate our entry into the rapidly growing Chinese market and improve our access to lower cost raw materials."
The current management team of Able New Energy will be retained as well as the Able brand of products. Eric Hwang will remain as managing director and will report to Philip Meek, Ultralife's vice president of manufacturing, who will be responsible for the integration of Able and its products into Ultralife.