Data center demand earns Donegal’s E&I engineering group a whopping $ 2 billion price tag
Donegal-based E&I Engineering Group was acquired for $ 2 billion (€ 1.69 billion) by US infrastructure company Vertiv in one of the largest corporate takeovers Irish private.
The deal, which is expected to be finalized by the end of the year, will make founder and principal shareholder Philip O’Doherty a billionaire, and will also generate windfall profits of several million euros for co-owners Damien McCauley and Cathal. McLaughlin.
Under the terms of the agreement, Vertiv will pay them an initial consideration of approximately $ 1.8 billion, including $ 1,170 million in cash and approximately $ 630 million of Vertiv shares.
Up to $ 200 million in additional cash is potentially payable, depending on the achievement of profit targets in 2022.
Mr O’Doherty, who is also chairman of Derry City FC, owns 60.7% of the company, according to the latest documents filed with the Companies Office. Mr. McCauley owns a stake of 26.2 pc and Mr. McLaughlin owns 13.1 pc.
E&I was founded in 1986 in Burnfoot, Co Donegal and has factories there as well as in Derry. The company, which manufactures electrical switching devices for the data center industry, employs 2,100 people at sites in Ireland, South Carolina and the United Arab Emirates.
The company said all current roles will be preserved in the deal and 100 new employees will be hired in the Northwest over the next year.
E&I’s initial sale price is 18 times 2019 earnings of £ 72.6million, or 20 times the potential top-up price.
Vertiv expects the company to increase that figure by 50% to $ 150 million, according to an investor presentation released after the deal was announced.
E&I management will get an additional $ 100 million if they add over $ 146 million to Vertiv’s revenue next year, plus an additional $ 100 million if they contribute $ 156 million.
Based in Ohio, Vertiv provides infrastructure products and services to customers in the data center, communications, commercial and industrial markets. It employs more than 20,000 people in 130 countries.
The company, which has a market capitalization of $ 9.25 billion, said the acquisition expands its addressable market by $ 7 billion per year and provides access to E&I “deep relationships” with blue chip companies .
Vertiv shareholders reacted badly to the company update. Shares fell 7% at the start of trading on the NYSE after the company revised its earnings forecast down due to supply shortages.
Centerview Partners acted as lead financial advisor to Vertiv alongside Citi, which is funding the transaction.