Pioneer Power Solutions Inc.
has agreed to sell its transformer divisions, including Franklin-based Jefferson Electric
Inc., to New York private equity firm Mill Point Capital for $65.5 million. The transaction is expected to close in the second half of the year.
Fort Lee, N.J.-based Pioneer Power manufactures, sells and services electrical transmission, distribution and on-site power generation equipment. Its transformer businesses make specialty electrical transformers for utility, commercial power, industrial manufacturing and construction users. It has locations in the U.S., Canada and Mexico.
The carve-out transaction includes all the assets and liabilities of Pioneer Transformers Ltd. and Pioneer Dry Type Transformer Group, which contains Jefferson Electric
, Bemag Transformer Inc. and Harmonics Ltd. LLC. The transaction is structured as $60.5 million in cash, with a $5 million seller’s note. Mill Point executive partner Antony Besso will become chairman of Pioneer Transformers.
Mill Point executives described the transaction as attractive because of growing North American power grid demands.
“Pioneer Transformers is led by an excellent team that has earned a reputation for quality products, superior engineering capabilities and excellent levels of customer service,” Besso said. “With strong brand equity, a history of operational excellence and the ability to now focus exclusively on its core transformer operations, the company is well-positioned to seize compelling growth opportunities.”
Pioneer Power will continue to operate its remaining divisions, Pioneer Critical Power and Pioneer Custom Electrical Products. PCP distributes generators and related products, and provides engine generator maintenance services. PCEP supplies custom products used in electrical power generation, including data centers. Pioneer Power also will keep 1.75 million shares and warrants to purchase another 1 million shares in CleanSpark Inc., to which it recently sold subsidiary Pioneer Critical Power Inc., which includes low-voltage switchgear and automatic transfer switch designs.
“Our belief that our assets were worth more individually than the market valuation of our combined organization is validated by this transaction, wherein we will divest a portion of our business for approximately 1.5x our current market capitalization, while retaining two exciting businesses and our status as a publicly traded Nasdaq listed company,” said Nathan Mazurek, chairman and chief executive officer of Pioneer. “Following the closing of this transaction, we plan to focus on streamlining and enhancing our Titan business in Minneapolis and our switchgear business in Los Angeles. With a strong balance sheet, we should be well positioned to assess our retained businesses, potential opportunities and the allocation of resources to best benefit shareholders. I am excited about phase two of Pioneer.”
Leaders of Mill Point and Pioneer Transformers could not be reached today for additional information.