Ener1, Inc. (Amex: HEV) has agreed to acquire an 83% interest in Enertech International, one of South Korea’s leading lithium-ion battery cell producers.
The purchase follows the recent announcement of the company’s plans to expand the manufacturing capacity of its lithium-ion automotive battery subsidiary, EnerDel, based in Indiana. The acquisition is intended to both broaden and expand Ener1’s production capabilities at a time when automakers worldwide are preparing to launch a new generation of hybrid and electric vehicles.
Ener1 will acquire the 83% equity stake in Enertech for 5 million
shares of Ener1, Inc. common stock, 2.56 million warrants and $600,000
in cash. The warrants will have a two-year maturity and will be
exercisable into shares of Ener1 stock at a strike price of $7.50.
"Enertech is one of the largest lithium-ion battery producers in Korea, behind only LG Chemical and Samsung," said Ener1 CEO Charles Gassenheimer. "This acquisition gives us immediate scale and volume manufacturing ability, as well as an important beachhead for supplying Asian car makers that plan to use lithium-ion technology in their electric drive vehicles."
Enertech is one of just a handful of companies that specializes in
producing large format flat (or "prismatic") cells, which Ener1
believes offer significant performance and manufacturing advantages
over more common cylindrical designs. The company operates a
200,000-square-foot, state-of-the-art plant outside Seoul capable of
producing cells for 15,000 electric vehicle battery packs per year.
Enertech has also worked with EnerDel to supply cells for prototype and
preproduction systems for Think Global.
"This is a unique opportunity for Ener1 to meet the rapidly growing demand for lithium-ion technology from automakers worldwide by securing a fully-operational production facility on terms that strengthen our balance sheet and enhance our position in the industry," Gassenheimer said. "Based on the terms of this transaction, shareholders equity is set to increase by approximately $45 million."
Enertech’s 200,000-square-foot plant in Chungbuk, Korea is capable of producing cells for 15,000 battery packs per year, which equates to approximately $125 million of annual revenue based on the current wholesale price of cells, according to a release. The physical plant can be expanded to up to $250 million of revenues with additional capital expenditure, Ener1 said.
Ener1 believes it is the first company to produce automotive lithium-ion batteries in the U.S., and that the acquisition of Enertech will strengthen its domestic growth plans. In August, the company announced a major expansion at its two Indiana facilities and plans to break ground on a third plant.
In August, Ener1 took full ownership of its EnerDel subsidiary by purchasing a 19.5-percent stake held by Delphi Automotive. T
About Ener1, Inc.
Ener1 develops and manufactures compact, high performance lithium-ion batteries to power the next generation of hybrid and electric vehicles. EnerDel has developed proprietary battery systems based on technology originally pioneered with the assistance of the Argonne National Lab.
Ener1 is seeking to become the first company to mass-produce a cost-competitive lithium-ion battery for hybrid and electric vehicles. Demand for battery solutions is being driven by a need to reduce dependence on oil as well as growing concern about vehicle emissions. In addition to the automobile market, applications for Ener1 lithium-ion battery technology include medical, military, aerospace, electric utility and other growing markets.
In addition to battery technology, Ener1 develops commercial fuel cell products through its EnerFuel subsidiary and nanotechnology-based materials and manufacturing processes for batteries and other applications through its NanoEner subsidiary.
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