News

Ultralife to Acquire Stationary Power Services, Inc.; Expand Into Standby Power Market

November 04, 2007 by Jeff Shepard

Ultralife Batteries, Inc. announced that it has entered into definitive agreements to acquire all of the outstanding shares of two affiliated companies: Stationary Power Services, Inc., an infrastructure power management services company, and Reserve Power Systems, Inc., a provider of lead-acid batteries for standby power systems.

The purchase price for both companies, excluding the payment of any contingent purchase price, is anticipated to be approximately $11.3 million. The acquisitions, subject to customary closing conditions, are expected to close by the end of the fourth quarter. Ultralife anticipates that these acquisitions will be accretive in the first quarter of 2008.

Established in 1989, Stationary Power Services is an infrastructure power management services firm specializing in the engineering, installation and preventive maintenance of standby power systems, uninterrupted power supply systems, dc power systems and switchgear/control systems for the telecommunications, aerospace, technology, banking and information services industries. Stationary Power Services is 100% owned by Bill Maher, the company’s founder and President. In 2006, Stationary Power Services generated operating income of $1.3 million on $8.9 million in revenue. Under the terms of the agreement, the purchase price will consist of $6 million in cash, a $4 million non-transferable subordinated convertible note to be held by the seller, and a performance-based equity incentive payable in 100,000 unregistered shares of Ultralife common stock over a period of up to five years. The $4 million convertible note carries a three-year term and is convertible at $15 per share of Ultralife common stock, with a forced conversion feature at $17 per share. Ultralife is working with its banks to finalize the financing.

Reserve Power Systems, established in 2006, supplies lead acid batteries primarily for use by Stationary Power Services in the design and installation of standby power systems. The purchase price for Reserve Power Systems consists of 100,000 unregistered shares of Ultralife common stock, currently valued at approximately $1.3 million, to be issued upon closing, and a performance-based earn-out through 2010 payable in cash. Reserve Power Systems is 50% owned by Bill Maher and 50% owned by Ed Bellamy, Stationary Power’s VP of Sales and Marketing.

"Acquiring Stationary Power Services will further our transformation from a battery company to a value-added power solutions, accessories and engineering services company serving a broad spectrum of government/defense and commercial markets. The global standby power market is experiencing enormous growth arising in large part from extensive investment in telecommunications, utility and transportation infrastructure especially in emerging markets that require reliable back-up power systems," said John D. Kavazanjian, Ultralife’s President and Chief Executive Officer. "Entering this market as an installer with proven standby power systems, strong customer relationships and established distribution channels will give us an immediate, differentiated competitive position in this highly attractive market. It will also expand our addressable market for rechargeable power solutions; complement the development project we have been working on for a telecommunications OEM; leverage our SmartCircuit™ technology; and place us in an excellent position to exploit the growing interest in eventually replacing lead acid batteries with lithium battery solutions in some standby power applications."