Item 1.01 Entry into a Material Definitive Agreement.
Acquisition of SL Power Electronics Corporation
On April 1, 2022, AEI US Subsidiary, LLC, a Delaware limited liability company (“Buyer”) and a direct subsidiary of Advanced Energy Industries, Inc., a Delaware corporation (“Advanced Energy”), Advanced Energy, in its capacity as a guarantor under the Acquisition Agreement (as defined below) (the “Buyer Guarantor”), SL Power Electronics Corporation, a Delaware corporation (“SL Power”), SL Delaware Holdings, Inc., a Delaware corporation (“Seller”), and Steel Partners Holdings L.P., a Delaware limited partnership (“Seller Guarantor”), entered into a Stock Purchase Agreement (the “Acquisition Agreement”), pursuant to which Buyer will acquire, directly and indirectly, 100% of the issued and outstanding shares of capital stock of SL Power and its subsidiaries from Seller, for a base purchase price of $144.5 million, plus any cash acquired and less any outstanding indebtedness and Seller transaction expenses, subject to customary adjustments, including adjustments for working capital as of the closing (the “Transaction”). SL Power is a global company that designs and manufactures AC/DC power conversion solutions used by Original Equipment Manufacturers (“OEMs”) in mission-critical medical, specialized lighting & audio and industrial applications with manufacturing in Mexico and China and sales operations in the United States, Europe and Asia.
The Acquisition Agreement contains customary representations and warranties from SL Power, Seller, Seller Guarantor, Buyer and Buyer Guarantor. In connection with, and following, the closing of the Transaction, Seller and its affiliates have agreed to provide SL Power with certain transition-related information technology, human resources and finance and administrative services for certain periods of time.
Completion of the Transaction is subject to customary closing conditions, including: (i) the absence of injunctions or other legal restraints prohibiting consummation of the Transaction; (ii) the material accuracy of the representations and warranties of SL Power, Seller, Seller Guarantor, Buyer and Buyer Guarantor; (iii) Seller and SL Power obtaining certain consents; (iv) material compliance by SL Power, Seller, Seller Guarantor, Buyer and Buyer Guarantor with their respective covenants; and (v) the absence of a material adverse effect on SL Power. The Buyer’s obligations under the Acquisition Agreement are not subject to any financing condition. The foregoing description of the Transaction does not purport to be complete and is qualified in its entirety by reference to the Acquisition Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.
The Acquisition Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about SL Power, Seller, Seller Guarantor, Buyer, or Advanced Energy or their respective subsidiaries and affiliates. The Acquisition Agreement contains representations and warranties by Buyer and Buyer Guarantor on the one hand, and SL Power, Seller and Seller Guarantor, on the other hand, made solely for the benefit of the other. The assertions embodied in those representations and warranties are subject to qualifications and limitations agreed to by the respective parties in negotiating the terms of the Acquisition Agreement, including information in confidential disclosure schedules delivered by each party in connection with the signing of the Acquisition Agreement. Moreover, certain representations and warranties in the Acquisition Agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between Buyer and Buyer Guarantor, on the one hand, and SL Power, Seller and Seller Guarantor, on the other hand, rather than establishing matters as facts. Accordingly, the representations and warranties in the Acquisition Agreement should not be relied on by any persons as characterizations of the actual state of facts about Buyer, Buyer Guarantor, SL Power, Seller or Seller Guarantor at the time they were made or otherwise. In addition, information concerning the subject matter of the representations and warranties may change after the date of the Acquisition Agreement, which subsequent information may or may not be fully reflected in Advanced Energy’s public disclosures.
