Advanced Energy acquires solar inverter provider, PV Powered

24 March of 2010 by

Advanced Energy Industries Inc. has signed a definitive agreement toacquire PV Powered Inc., a leading manufacturer of grid-tied PVinverters in the residential, commercial, and utility-scale markets. The acquisition is expected to add an estimated $40-50 million to AdvancedEnergy’s 2010 revenues and be neutral to marginally dilutive to GAAP net income in 2010.

Hans Betz, CEO of Advanced Energy, said: "We are very excited to announce this acquisition and believe the combinationof Advanced Energy and PV Powered will continue our strong momentum inthe inverter market, propelling us forward as a leading manufacturer ofsolar inverters in North America. The addition of PV Powered’stransformer-based inverters with power levels below 500kw for the smallto mid range commercial inverter market allows Advanced Energy to target a portion of the market that we have not yet addressed.

"As acombined company, our comprehensive portfolio of both transformerlessand transformer-based inverter products will serve the entire spectrumof commercial project sizes from 30kw to multi-megawatt utilityinstallations, placing us firmly at the heart of the emerging andfast-growing solar inverter market."

PV Powered is an innovationleader for high-reliability transformer-based PV inverters utilized incommercial roof top and ground mount systems in the North Americanmarket.

Founded in 2003 and based in Bend, Oregon, PV Powered is a privately held company with approximately 90 employees and $21million of revenues in 2009. Its inverters range in size from 30kw to260kw for the commercial market and 1kw to 5kw for the residentialmarket, with market leading efficiency ratings.

PV Powered’sexperienced inverter engineering team has continuously optimized theperformance and reliability of its inverters allowing PV Powered tooffer the industry’s first standard 10 year product warranty andoptional 20 year extended warranty.

"The employees and management of PV Powered are extremely excited at the prospect of joining Advanced Energy," said Gregg Patterson, chief executive officer of PV Powered.

"PV Powered and Advanced Energy have a collective history of industryinnovation, driven by a commitment to power conversion efficiency andinverter reliability that leads the market. Both organizations share acommon mission to deliver the lowest levelized cost of energy and thehighest levels of customer satisfaction. Together, we can offer thebroadest technology and product portfolio in the industry."

Under the agreement, Advanced Energy will acquire PV Powered for a purchaseprice of up to $90 million consisting of $50 million to be paid atclosing in the form of $35 million in cash and $15 million in AdvancedEnergy’s common stock, as well as up to $40 million in a potentialearn-out based on PV Powered’s full year 2010 financial results. Thetransaction will be subject to a number of other customary closingconditions and regulatory approvals including Hart Scott Rodino.Throughout 2010, PV Powered will operate as a wholly-owned subsidiary,continuing to sell and support its PV Powered branded inverters.

Currently, we anticipate sales of PV Powered’s inverter to contribute as much as$40M-$50 million to Advanced Energy’s 2010 revenue. Of that, we expect$30-35 million to come from sales to the commercial market and $10-15million from the residential market. We anticipate gross margins onthese products to be in the range of 26-29 percent and have additionaloperating expenses of $3-4 million.

Needham & Company, LLCacted as the financial advisor and provided a fairness opinion toAdvanced Energy related to this transaction.

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