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Bel Fuse Inc. (Nasdaq:BELFA, BELFB) has officially announced its strategic move to acquire an 80% stake in Enercon Technologies, Ltd. for $320 million, with the deal's enterprise value pegged at $400 million. The acquisition, which includes potential earnout payments of up to $10 million for the 2025-2026 period, aims to enhance Bel’s footprint in the aerospace and defense markets. The transaction is anticipated to finalize by the end of 2024, pending regulatory approvals.
This acquisition will notably increase Bel’s revenue exposure to the aerospace and defense sector from 17.5% to 31%, based on the last twelve months’ figures up to Q2 2024. Enercon, known for its specialized power conversion and networking solutions, boasts impressive financials, with a gross margin of 46.0% and an adjusted EBITDA margin of 32.5%, both surpassing Bel’s historical averages. The acquisition is projected to be accretive to Bel’s GAAP earnings per share (EPS) within a year after closing, and immediately beneficial to its non-GAAP EPS.
Daniel Bernstein, CEO of Bel, expressed enthusiasm about the deal, stating, “The acquisition of Enercon will extend Bel’s Power segment into the aerospace and defense end markets, deepening our partnership with customers who support critical applications.” He emphasized that around 30% of Bel's Power segment revenue will derive from aerospace and defense after the acquisition, contributing approximately 37% to the company’s consolidated revenue.
Enercon’s capabilities will complement Bel’s existing product offerings, providing new opportunities for cross-selling in the aerospace and defense sectors. The acquisition also expands Bel’s manufacturing operations into India and the U.S., while leveraging engineering talent from Israel.
Eyal Shary, CEO of Enercon, remarked on the partnership's potential, stating, “I am very excited for the next chapter of Enercon to be with a strategic partner that can expand and globalize the business.” He believes that the collaboration will enhance Enercon’s growth trajectory.
Commenting on the deal, Shmoulik Barashi and Yochai Hacohen, board members at Enercon and partners at Fortissimo Capital, voiced confidence in Enercon's future under Bel’s leadership. They highlighted their pride in the company’s growth journey during Fortissimo’s investment period.
To finance the acquisition, Bel intends to utilize a combination of its cash reserves and an extension of its current credit facility, ensuring a smooth transition and continued investment in Enercon’s potential growth. This strategic acquisition positions Bel Fuse Inc. for significant advancements in a critical industry, reinforcing its commitment to innovation and expansion.
