American Superconductor Corp. acquires power technologies firm Switch Engineering

American Superconductor Corporation (AMSC) acquired Finland based power technologies firm Switch Engineering. American Superconductor is a global power technologies company. The transaction was for a consideration of €190 million and is expected to be immediately accretive and support AMSC’s growth to US$1 billion in annual revenues. 

With sales of both power converter systems and permanent magnet generators to wind turbine manufacturers in China, Europe, Korea and the U.S., AMSC expects the acquisition to diversify its customer base and channels to market.

Greg Yurek, founder and chief executive officer of AMSC noted that with highly complementary engineering capabilities and product offerings, the combination of The Switch and AMSC will provide significant additional value for the firms’ customers, partners and investors. Yurek reiterated that both AMSC and The Switch are well positioned in Asia, which is now the world’s largest and fastest growing wind power market.

According to Yurek, the combined entity will serve 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 its Windtec™ licensees, he said.
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 also opens a new addressable market opportunity exceeding $1 billion annually with its portfolio of proprietary permanent magnet generators (PMG).

For calendar year 2010, The Switch generated approximately US$179 million in total revenue and approximately US$15 million in net income. The transaction is valued at approximately US$265 million, with approximately US$186 million to be paid in cash and the remainder to be paid in the form of AMSC stock based in part on the average closing price of AMSC’s stock prior to the closing of the deal.

AMSC also expects to leverage The Switch’s strong background in advanced synchronous generators to commercialize superconductor generators for direct drive SeaTitan™ wind turbines. 

20th March 2011

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