Bel Announces Agreement to Acquire Enercon Technologies

Core Viewpoint - Bel Fuse Inc. has announced a definitive agreement to acquire an 80% stake in Enercon Technologies, Ltd. for $320 million, with an enterprise value of $400 million, aiming to enhance its presence in the aerospace and defense markets [1][2][3]. Transaction Highlights - The acquisition will increase Bel's exposure to the aerospace and defense market from 17.5% to 31% of total revenue based on LTM Q2 2024 [2]. - Enercon has a gross margin of 46.0% and an Adjusted EBITDA margin of 32.5% for LTM Q2 2024, which is higher than Bel's historical margins [2]. - The transaction is expected to be accretive to Bel's GAAP EPS within one year post-close and to non-GAAP EPS on Day 1 [2]. - Bel anticipates a net leverage of under 2.0x within one quarter from the close of the transaction [2]. - Enercon is recognized as a leading supplier of power conversion and networking solutions to the aerospace and defense sectors globally [2][3]. Strategic Implications - The acquisition will allow Bel to extend its product portfolio in the aerospace and defense markets, creating potential cross-selling opportunities [2]. - Bel's manufacturing footprint will expand into India and the U.S., with new capabilities and a skilled engineering team based in Israel [2]. - The acquisition is expected to be completed by the end of 2024, pending customary closing conditions and regulatory approvals [2]. Financial Aspects - Bel plans to finance the acquisition through a combination of cash on hand and an expansion of its existing credit facility [4]. - Enercon's LTM Q2 2024 sales were reported at $111 million, with a gross profit margin of 46% [7]. - The forecast for Enercon's standalone full year 2024 GAAP net sales is projected at $120 million [17].