News

Ultralife To Acquire U.S. Energy Systems

November 05, 2008 by Jeff Shepard

Ultralife Corp. has entered into a definitive agreement to acquire certain assets of U.S. Energy Systems, Inc., and its services affiliate, U.S. Power Services, Inc., (which operates under the U.S. Energy Systems name), a standby power installation and power management services company headquartered in Riverside, California. The purchase includes all tangible assets, intellectual properties and operations going forward.

Under the terms of the agreement, Ultralife will pay $2.85 million in cash and a performance-based equity incentive payable in an amount up to 200,000 unregistered shares of Ultralife Corp. common stock provided that certain financial milestones are achieved over a period of up to four years. The company plans to finance the acquisition with cash on hand and credit available through the company’s credit facility, as necessary. The acquisition, subject to customary closing conditions, is expected to close in the fourth quarter. Ultralife anticipates that this acquisition will be accretive in the first quarter of 2009.

Established in 2003, U.S. Energy Systems specializes in the engineering, supply, installation and preventive maintenance of standby power systems, uninterrupted power supply systems, dc power systems and switchgear/control systems for the telecommunications, utilities, technology, petrochemical, financial and information services industries. The company has customers nationwide, but in particular on the West Coast and in Hawaii. U.S. Energy Systems is jointly owned by Ken Cotton, U.S. Energy’s founder and President; Simon Baitler, Chairman; Shawn O’Connell, Executive Vice President; and Tim Jacobs. In 2007, U.S. Energy generated $6.3 million in revenue.

"Acquiring U.S. Energy Systems advances our goal of becoming the leading provider of engineering, installation, integration and maintenance services to the growing standby power industry," said John D. Kavazanjian, Ultralife’s President and Chief Executive Officer. "Along with our strong East Coast presence in this market, we now have a broadened geographic footprint to service national accounts in target industries and an extended reach for our comprehensive rechargeable standby power solutions. This bolt-on acquisition also creates synergies in customer and service coverage, greater pricing power with major hardware suppliers and economies of scale through centralized back-office support in our standby power services business.

"By strengthening our Design and Installation Services segment, which will comprise Stationary Power Services and U.S. Energy Systems, we are taking one more step in our transformation to become a value-added power solutions, communications systems and engineering services company serving a broad spectrum of commercial, government and defense markets," added Kavazanjian. "Both Ken Cotton and Shawn O’Connell have created an exceptional company, and we look forward to their continued leadership in supporting our growing presence in the standby power industry."