Power technology companies The Switch and American Superconductor Corporation (NASDAQ: AMSC) today announced that they have entered into a definitive agreement whereby AMSC intends to acquire The Switch to help strengthen its position in the wind turbine component market and to support AMSC’s growth to EUR 720 million (US$ 1 billion) in annual revenues. With sales of both power converter systems and permanent magnet generators to wind turbine manufacturers worldwide, this acquisition, worth EUR 190 million, diversifies AMSC’s customer base and channels to market and enhances The Switch’s growth.
Vantaa, Finland and Devens, MA, US March 14, 2011 – “In today’s market, there is a great demand for multi-megawatt turbines utilizing advanced power electronics and permanent magnet generators (PMG) – a trend that AMSC and The Switch can take advantage of,” said Jukka-Pekka Mäkinen, President and CEO of The Switch. “From virtually all angles – culturally, commercially and strategically – the synergies of The Switch and AMSC combination were immediately evident to both of our organizations. We will now be able to exploit our combined engineering and manufacturing expertise to speed up our clients’ access to markets as well as to significantly increase the number of wind turbines ‘Powered by AMSC.’”
“With highly complementary engineering capabilities and product offerings, the combination of The Switch and AMSC will provide significant additional value for our customers, partners, and investors,” said Greg Yurek, founder and CEO of AMSC. “Both AMSC and The Switch are well positioned in Asia, which is now the world’s largest and fastest growing wind power market. Our combined company is expected to be serving China’s three largest wind turbine manufacturers – Sinovel, Goldwind and Dongfang – in various capacities. The Switch will also significantly strengthen AMSC’s presence in Western wind markets with customers such as GE and create a new channel to market for AMSC in addition to our Windtec™ licensees. In short, this combination will create a global wind powerhouse.”
AMSC’s growth in recent years has primarily been driven by the sale of wind turbine core electrical components and full wind turbine electrical control systems (ECS) to Windtec licensees and strategic partners. The Switch provides a substantial existing channel for power electronics and control system sales to other global wind turbine manufacturers. The Switch focuses on the production of power converter systems (PCS), which are a subsystem of full wind turbine ECS. By joining forces with The Switch, AMSC also sees the opportunity to further enhance the performance and reduce the cost of its PCS and ECS offerings. The Switch today offers PCS’s with power ratings ranging from 1 megawatt (MW) to 6 MW.
The Switch also opens a new addressable market opportunity exceeding EUR 750 million annually with its portfolio of proprietary PMGs. PMGs are a powerful new class of generators that are utilized inside an increasing number of both geared and direct drive wind turbines. The Switch today offers low-, medium- and high-speed PMGs up to 6 MW in power rating. These PMG systems, which already are being utilized by several companies in Europe, the U.S. and Asia, will extend the technology portfolio currently available to Windtec customers and increase AMSC’s potential value per MW of wind power. AMSC also expects to leverage The Switch’s strong background in advanced synchronous generators to commercialize superconductor generators for direct drive SeaTitan™ wind turbines.
For calendar year 2010, The Switch generated EUR 134.6 million in total revenue and EUR 11.8 million in net income. The transaction is valued at EUR 190 million, with EUR 133 million to be paid in cash and the remainder to be paid in the form of AMSC stock. AMSC plans to use its existing cash balance to finance the deal. Closing of the transaction, which has been approved by both companies’ boards of directors and is subject to customary closing conditions and regulatory issues, is expected by August 31, 2011.
About American Superconductor (NASDAQ: AMSC, www.amsc.com)
AMSC offers an array of proprietary technologies and solutions spanning the electric power infrastructure – from generation to delivery to end use. The company is a leader in renewable energy, providing proven, megawatt-scale wind turbine designs and electrical control systems. The company also offers a host of Smart Grid technologies for power grid operators that enhance the reliability, efficiency and capacity of the grid, and seamlessly integrate renewable energy sources into the power infrastructure. These include superconductor power cable systems, grid-level surge protectors and power electronics-based voltage stabilization systems. AMSC’s technologies are protected by a broad and deep intellectual property portfolio consisting of hundreds of patents and licenses worldwide.
