Carmanah Technologies Corporation (TSX Venture: CMH) has entered into an agreement to acquire Soltek Powersource Ltd., a privately-held manufacturer/supplier of solar power systems for industrial,government, residential and retail applications.
With approximately 60% market share, SPS is the largest Canadian supplier of solar systems and solar-related equipment. In its most recently completed fiscal year ended August 31, 2004, the company achieved revenues of approximately $17.5 million and EBITDA of approximately $1.2 million. SPS has maintained strong gross margins throughout its market expansion and has been profitable since inception in 1988. SPS currently employs 65 people and is headquartered in Victoria, British Columbia, with additional offices in Alberta, Ontario and California.
Carmanah has agreed to acquire SPS for $10 million. $6 million will be paid in cash from existing funds and $4 million equivalent in common shares. An additional contingent payment of up to $2 million in common shares (priced as above) may also be payable if SPS reaches specified revenue (pro-rated between $9 million and $12 million) and an EBITDA minimum of 5.5% of revenue for the six month period ending December 31st, 2005.
The transaction is scheduled to close June 30, 2005, subject to completion of due diligence and the approval of Carmanah’s Board of Directors.
“With this acquisition, Carmanah will become the largest solar company in Canada”, states CEO, Mr. Art Aylesworth. “The synergies we see from this purchase are extensive. We anticipate a new range of co-developed solar/LED general illumination products, including security lighting, street lighting and sign lighting, for applications in all of the markets we currently serve. We also foresee an entirely new product line of standardized ‘plug-and-play’ solar power sources that would take advantage of SPS’s existing range of ‘solar engines’ and Carmanah’s world-leading energy management technology.”
In addition, Carmanah and SPS will share marketing and sales infrastructure to further broaden their combined sales reach. “Our two companies have complementary expertise – Carmanah with its self-contained packages and proprietary LED technology, and SPS with its larger solar power systems”, states Aylesworth. “We also have overlapping customer bases, including government agencies, traffic OEMs, and resellers. Our combined sales staff will have a significant range of products to offer customers across many geographic and vertical markets.”
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