C&D Technologies to Acquire Datel

Jun 16, 2004 3:39 PM
By David Morrison, Editor, PETech

In a deal that will merge two power supply companies, C&D Technologies (Blue Bell, Pa.) has signed an agreement to buy Datel Inc. (Mansfield, Mass.) in an all-cash transaction. Exact terms of the agreement were not disclosed. However, Wade H. Roberts, Jr., president and CEO of C&D Technologies, indicated in a conference call this past Monday that the purchase price was “more than $50 million but less than $100 million.” Datel, which primarily manufactures dc-dc converters but also builds digital panel meters and data acquisition components, had sales of approximately $60 million for the 12 months ending March 2004.

C&D Technologies produces electrical power storage and conversion products used in telecommunications and industrial applications. For the fiscal year that ended Jan. 31, 2004, the company recorded sales of approximately $325 million. Of that amount, the company’s Power Electronics division—which supplies ac-dc power supplies, dc-dc converters, and magnetics—accounted for approximately $39 million in sales.

By purchasing Datel, C&D Technologies broadens its power product line in mid-power dc-dc converters while obtaining access to a diverse group of OEM customers, including overseas customers. The acquisition also expands C&D’s presence in military markets.

Commenting on the agreement, Roberts stated, "This transaction comports with our plans for growing organically as well as via acquisition. This acquisition expands our customer base, product portfolio and international presence. In this latter regard, Datel's historic strength in Asia and Europe considerably enhances our international position. We look forward to Datel joining C&D while recognizing that this fine company has been extremely successful on its own."

In Monday’s conference call, a few details about the impact of this agreement on the management of the two companies were revealed. In his opening statement, Roberts said, “Regarding synergies, our financial assessment of Datel’s attractiveness does not incorporate any cost-reduction synergies. Yet, we are confident that some will ultimately be realized.”

Roberts also commented that, as a result of the deal, Datel’s “principal shareholder” and “historic most senior manager”—an allusion to Datel’s founder and president Nicholas Tagaris—will be “exiting the business.” However, other members of the existing management team at Datel will initially be reporting to J.D. Johnson, the vice president and general manager of C&D Technologies’ Power Electronics division.

When completed, this transaction is expected to be immediately accretive to earnings. While subject to antitrust clearance and customary closing conditions, the transaction is expected to close in the second quarter.

The acquisition of Datel comes on the heels of another agreement that expanded C&D Technologies’ power portfolio. On May 27, C&D closed the acquisition of Celab Ltd. of Bordon, Hampshire, United Kingdom, in another all-cash transaction for approximately $12 million, net of approximately $3 million in cash acquired. Celab Limited is a provider of power conversion products, predominantly sold into military, cable TV and telecom applications in Europe.

Both the Datel and Celab transactions complement C&D's Power Electronics division. By virtue of these combined acquisitions, C&D would expect to nearly triple its power electronics revenue.

C&D Technologies held a Web cast conference call on Monday, June 14, 2004, at 9 a.m. Eastern time to discuss developments related to the Datel acquisition. A replay of the conference call will be available at the C&D Web site until midnight on Monday, June 28, 2004.

For more information, visit www.cdtechno.com/cd/news/press/press061104.htm.

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