Flex Announces Agreement to Acquire Electrical Power Products (EP²)

Core Viewpoint - Flex has announced a definitive agreement to acquire Electrical Power Products, Inc. (EP2) for approximately $1.1 billion, which is expected to enhance its capabilities in the electrical power sector and contribute positively to adjusted EPS in the first full fiscal year post-acquisition [1][4]. Company Overview - EP2 has over 35 years of experience in designing and manufacturing engineered control and relay panels for utility, power generation, and industrial customers, operating a significant manufacturing campus in Des Moines, Iowa [2]. - The acquisition is expected to generate approximately $323 million in revenue for EP2 in the fiscal year ending March 31, 2026, with anticipated double-digit organic growth and a mid to high-teens adjusted EBITDA margin [4]. Strategic Implications - The acquisition will expand Flex's Critical Power portfolio and deepen its presence in utility and power generation markets, aligning with long-term trends such as grid modernization and electrification [3]. - Flex's CEO emphasized that EP2's expertise will enhance the company's ability to deliver innovative power solutions amid increasing demand and complexity in the energy sector [3]. Financial Aspects - The transaction is valued at approximately $1.1 billion, with anticipated tax benefits of around $0.1 billion, resulting in an effective cost of about $1.0 billion after tax benefits [1]. - The deal is expected to close in the first quarter of Flex's fiscal year 2027, pending customary closing conditions [4]. Advisory Roles - Citi is serving as the exclusive financial advisor to Flex, while RA Capital Associates LLC is advising EP2 on the transaction [5].