The acquisition, which follows the recent announcement of the company’s plans to expand EnerDel’s manufacturing capacity, is intended to be immediately synergistic, and to both broaden and expand Ener1’s production capabilities. Enertech will immediately start supplying EnerDel’s new Indiana plants with cells for use in the assembly of automotive battery packs.
Enertech specializes in producing large-format prismatic cells, which Ener1 believes offer significant performance and manufacturing advantages over more common cylindrical designs. The company operates a 200,000 ft2 plant outside Seoul with an electrode production capacity sufficient to support 1,250 electric vehicle (EV) packs or 10,000 hybrid electric vehicle (HEV) packs per month.
EnerDel began using Enertech in 2007 as an outsourced supplier for 20 Ah cells for prototype and pre-production 27 kWh battery packs for Think Global. (Earlier post.)The EnerDel EV cells use LiMn2O4-spinel (LMO) cathodes and hard carbon anodes.
All the cells for Think, said Ener1 CEO Charles Gassenheimer during an conference call discussing the acquisition, are currently made at Enertech, although the packs are assembled at EnerDel’s Indiana plant. Think Global, Gassenheimer also said, has issued a firm purchase order for $34 million worth of Li-ion battery packs from EnerDel.
Ener1 is acquiring the 83% equity stake in Enertech from a Hong Kong-based private equity fund that is coming to the end of its life. The deal, worth about $55.8 million, is for 5 million shares of Ener1, Inc. common stock, 2.56 million warrants and $600,000 in cash. The warrants will have a two-year maturity and will be exercisable into shares of Ener1 stock at a strike price of $7.50. Ener1 shares closed Wednesday at $7.05.
Enertech was formerly part of the Saehan Group, which was spun out of the Samsung Group. The company holds a number of patents, including a key patent on winding technology.
The current electrode production capacity equates to about $125 million of annual revenue based on the current wholesale price of cells, Gassenheimer said. The physical plant can be expanded to up to $250 million of revenues with additional capital expenditure of about $30-40 million. Gassenheimer expects that combing the expansion of Enertech capacity with the recently announced expansion of its US plants (earlier post), EnerDel will have the capacity for about $700 million in annual revenue—$250 million from Enertech, $450 million from the US plants.
Enertech currently produces 22 million lithium-ion cells annually for the cell phone, laptop and PDA markets. Customers include LG, Samsung and Motorola.
We found a path to accelerate our business plan and more rapidly prepare for the coming shift in automotive demand. This acquisition gives us immediate scale and volume manufacturing ability, as well as an important beachhead for supplying Asian car makers that plan to use lithium-ion technology in their electric drive vehicles.—Ener1 CEO Charles Gassenheimer
Gassenheimer said the expertise from Enertech’s engineering team will help accelerate expansion of the EnerDel Indiana plants. Ener1 believes it is the first company to produce automotive lithium-ion batteries at commercial scale in the US, and that the acquisition of Enertech will strengthen its domestic growth plans.
In August, the company announced a major expansion at its two Indiana facilities and plans to break ground on a third plant. Also in August, took full ownership of its EnerDel subsidiary by purchasing a 19.5% stake held by Delphi Automotive.