AMSC Buying Finnish Co.
Devens-based American Superconductor Corp. plans to buy Finnish power technology company The Switch Engineering Oy for about $265 million.
American Superconductor predicts that the acquisition will allow it to more than double its annual revenues to $1 billion and achieve operating margins of more than 20 percent by fiscal 2014.
AMSC officials say they've signed a definitive agreement to buy the company, which makes parts for wind turbine manufacturers in China, Korea, Europe and the U.S. The deal is priced at 190 million Euros -about $265 million at current exchange rates. It will be paid in $186 million cash plus AMSC stock.
The deal has already received approval from both companies' boards of directors and is expected to close by Aug. 31, subject to regulatory approvals and customary conditions.
As of April 1, AMSC said it is also reorganizing its business, which is currently divided into "power systems" and "superconductor" segments, so that its two divisions will be "wind" and "grid." The Switch, which had $179 million in revenue last year, will become part of the wind segment.
AMSC said it is now predicting that its revenues for its fiscal year 2010, which ends March 31, will be toward the lower end of the previously forecast $430- to $440-million range. Costs related to the acquisition will also push net income down, from a range of $48 to $50 million to between $44 and $46 million.
The company also said fiscal 2011 will be a "transition year" in which organic revenue growth will slow to 5 to 10 percent.
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