Hammond Power Solutions (HPS) M&A announcement summary

Deal rationale and strategic fit

• Acquisition expands integrated electrical solutions and power quality capabilities, enhancing offerings for industrial, infrastructure, and energy transition markets.

• Broadens global commercial footprint and geographic reach, leveraging AEG Power Solutions' presence in Europe and Asia for diversified growth.

• Increases exposure to sectors like offshore wind, green hydrogen, nuclear, data, and IT, supporting growth in emerging and traditional markets.

• Accelerates recurring revenue through a larger installed base, services, and aftermarket.

• Creates a dominant position in the industrial UPS sector and aligns with electrification and energy transition megatrends.

Financial terms and conditions

• All-cash transaction with an enterprise value of CAD 365 million (C$365 million or $365 million), funded through a new committed syndicated debt arrangement with a term loan and revolving credit facility.

• HPS will repay AEG Power Solutions' outstanding bank debt.

• Expected net leverage at closing is about 2.7x pro forma trailing twelve months.

• Transaction expected to close in Q2 2026, subject to regulatory and customary approvals.

• Anticipated to be accretive to adjusted EPS in the first full year, with returns on invested capital exceeding cost of capital.

Synergies and expected cost savings

• Early operational synergies expected from commercial collaboration and cross-selling, especially bringing AEG products to North America.

• Complementary product offerings enable delivery of fully integrated electrical powertrain solutions.

• Scale and operating leverage expected to improve margins over time.