SolarEdge Buys Israeli UPS Co Gamatronic

Israeli solar energy company SolarEdge Technologies Inc. (Nasdaq: SEDG) is entering the uninterruptible power supply (UPS) market. The company, which develops and manufactures systems for optimizing and monitoring solar energy, reported that it has acquired the assets and activity of Israeli company Gamatronic Electronic industries Ltd. (TASE: GAMT) for NIS 41 million, subject to adjustments relating to the company’s inventory on the date on which the deal is completed.

SolarEdge’s share price leaped 6% to a record $59.10 in late Wall Street trading yesterday following the publication of the company’s first quarter financial statements, boosting its market cap to $2.8 billion.

“This acquisition is a first step towards expanding SolarEdge’s activity to new markets outside the solar field,” SolarEdge founder and CEO Guy Sella said. “The UPS market has been assessed in the billions of dollars and is likely to evolve significantly in the coming years. We believe that the SolarEdge’s technological innovation, operating excellence, and business leadership, combined with Gamatronic’s technology and experience in this market, will enable us to become a leading player in the market.

The price of Gamatronic’s share, which will probably still be listed on the TASE after the deal is completed, responded to the report by soaring 50%, boosting the company’s market cap to NIS 60 million. Before today’s increase, the share had lost over 60% of its value over the past three years, reflecting its investors’ disappointment with the company’s results.

SolarEdge is acquiring all of Gamatronic’s assets in the framework of the deal, including the company’s intellectual property and brand name, except for its customers’ balances (NIS 25 million as of the end of 2017), dormant shares (worth NIS 12 million), money that is not part of business activity, and the company building in Har Hahotzvim in Jerusalem.

100 of Gamatronic’s 130 employees will be employed by SolarEdge. SolarEdge is also getting an option to acquire Gamatronic’s subsidiary in the UK for an estimated NIS 2 million.

After the deal is completed (expected by the end of June this year), subject to various conditions, Gamatronic will receive 50% of the pre-tax profit generated by the sold activity in the first year after the deal is completed and 33% of the pre-tax profit in the second year.