The Oregon-based energy and technology-services company said the transaction will consist of third-party debt and company equity valued at about $37 million (excluding working capital and certain other adjustments upon closing).
The acquisition is expected to close within the next 20 days, subject to customary closing conditions.
North Carolina-based Reach Construction Group is an engineering, procurement and construction (EPC) company with expertise in the renewable energy industry.
CUI Global noted that Reach has a contractual backlog for 2020 exceeding $100 million. The acquisition is expected to be immediately accretive to CUI Global's consolidated results.
Reach, a leading provider of EPC services in the utility-scale solar industry, is expected to deliver several strategic benefits, including:
- Expanding CUI Global's energy services business into the rapidly growing alternative energy industry, particularly building on Reach's established relationships with solar developers and panel manufacturers in the utility-scale solar market.
- Diversifying Reach's current capabilities into a broader set of service offerings in the energy infrastructure market.
- Enhancing CUI's revenue while contributing positive net earnings.
"This transaction is a considerable first step in our strategic plan to become a diversified energy infrastructure services company," said William Clough, executive chairman of CUI Global, in a statement Thursday.
"Under the direction of our new CEO, Jim O'Neil, we expect this transaction to deliver strong financial results, which will result in positive earnings for CUI Global's shareholders on a consolidated basis."
O'Neil added: "Reach is a recognized market leader in providing renewable energy EPC services and the leadership team has over 50 years of combined industry experience successfully delivering renewable energy projects to their customers."
O'Neil said the acquisition will allow CUI Global to expand its infrastructure energy services into the growing renewable energy market while playing a key role in helping to reduce carbon emissions in the country.
“This acquisition also provides a solid platform for us to diversify into synergistic services that serve the electric power industry,” he added. “We look forward to working with Reach to capitalize on their leadership position in the renewable energy market and increase value to our shareholders.”
Reach CEO Brandon Martin said that with solar accounting for 40% of all new electric generating capacity in 2019, the acquisition gives CUI Global a competitive advantage over other traditional energy companies that haven’t yet made the transition toward clean energy.
“I am honored to join this team of proven industry leaders and visionaries," Martin added.
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