Carmanah Technologies Corp. has transformed into Canada’s biggest solar company with an acquisition that could be worth $12 million if targets are reached.
Last Wednesday, Victoria’s Carmanah (CMH:TSX Venture) announced it had bought Soltek Powersource Ltd. – also based in Victoria – in a transaction that includes $6 million in cash and $4 million in common shares.
Another $2 million in shares may be payable if Soltek hits certain revenue and EBITDA targets. The purchase is set to close at the end of June.
For the fiscal year ended August 31, 2004, Soltek’s revenues were about $17.5 million and it has been profitable since beginning in 1988, according to a press release.
Carmanah’s latest annual results, ended December 31, 2004, reported sales of $15.9 million and net earnings of $592,823.
Carmanah manufactures LED-based lighting products for transit, marine, aviation, roadway and other markets. Soltek manufactures and supplies solar-power systems for industrial, government, residential and retail applications.
“We think that the expertise that Carmanah has will be valuable across a wider range of solar-powered products than we currently offer and to a wider audience than we currently sell to,” said Carmanah CEO Art Aylesworth.
“It takes Carmanah from a solar-power small light provider `and` basically turns it into a solar-power energy provider,” added Marcel Brichon, a special situations analyst with Northern Securities Inc.
Brichon noted that the purchase means Carmanah will be the biggest solar-power company in Canada in terms of revenue.
The deal was in the works for about five months, Aylesworth said.
Soltek has 65 employees, and Aylesworth said there would be no layoffs. Including the purchase, Carmanah will have about 180 staffers.
David Egles, Soltek’s CEO, will join Carmanah’s senior management team and will sit on its board.
At press time last Thursday, Carmanah’s share price stood at $2.81, up $0.11 from the previous day’s close.