Global digital infrastructure and continuity solutions provider, Vertiv (NYSE: VRT), has acquired E&I Engineering Ireland and its affiliate, Powerbar Gulf, for approximately $1.8 billion in cash upfront. Vertiv will get $200 million in cash extra if certain profit milestones are met by 2022.
The acquisition would complete Vertiv’s data center offering by adding a leading independent provider of switchgear, busway and modular power solutions. E&I’s products in critical power switchgear, UPS input and output switch gear and busway would fill the remaining gaps in the Vertiv critical power infrastructure offering.
Founded in 1986 by Philip O’Doherty, E&I is pioneering innovative in-house integrated power solution designs and technologies suited to particular client project demands. E&I has a long history in the power distribution industry and extensive ties with a blue-chip client base in more than 30 countries, with annual revenues of roughly $460 million and 2,100 workers. E&I’s data center power infrastructure products would compete in a $7 billion addressable market that is anticipated to expand at a rate of 5% per year through 2025.
Together, Vertiv and E&I will serve some of the world’s leading hyperscale cloud and colocation providers.
“The acquisition of E&I represents a key milestone in Vertiv’s strategy, completing our portfolio of in-building power train offerings for data centers and vital commercial and industrial markets,” said Rob Johnson, Chief Executive Officer (CEO) at Vertiv. “The combination will amplify Vertiv’s growth opportunities and profitability, while enabling Vertiv to deliver differentiated solutions that manage a customer’s entire power infrastructure as an integrated system. We look forward to adding E&I’s highly skilled team members to the Vertiv family. Our companies share a strong culture of engineering excellence and innovation and a passion for serving our customers with differentiated products and service.”
Cost Synergies, Market Opportunities
Today, E&I competes in three markets: North America, Europe, and the Middle East. Vertiv’s position outside of the United States, notably in Europe and Asia, will be used in this deal to swiftly grow penetration with new clients.
Within three years of closing, Vertiv plans to generate about $18 million in pre-tax cost synergies. Procurement, general, administrative, and product costs would all contribute to cost synergies. Clients and goods that are highly complimentary would create revenue synergy opportunities, allowing for cross-selling and integrated solutions for each company’s clients.
“This transaction brings together two highly complementary businesses and represents a great outcome for E&I’s employees and customers,” said Philip O’Doherty, founder and CEO of E&I. “We are excited to join the Vertiv team and to continue to grow our business through Vertiv’s global reach, strong channel presence and great customer positioning in critical digital infrastructures.”
Vertiv intends to fund the acquisition using cash on hand as well as fresh debt financing, which will be backed up by committed funding.
“While this deal marks the first acquisition by Vertiv since becoming a public company, our team has thoughtfully followed acquisition best practices during the process of identification, valuation, due diligence and integration planning,” said Dave Cote, Vertiv’s Executive Chairman. “E&I represents a unique opportunity for Vertiv and it fits well in the Vertiv portfolio. I am excited about the potential of these two great businesses coming together as one.”