ASCO Power Technologies has lots of experience managing smooth transitions. Now it will manage a transition in ownership. Schneider Electric announced today that it has purchased ASCO from Vertiv for $1.25 billion in an all-cash transaction. Meanwhile, Vertiv’s ownership said the proceeds from the sale would enable them to consider a new capital structure.
ASCO’s products play a key role in the data center power chain. The company is a leading maker of automatic transfer switches (ATS) which transfer critical loads from primary power to a backup generation – typically shifting the data center power source from a utility grid to UPS units and generators.
Today’s deal makes Schneider Electric the global leader in the ATS market, the company said. Schneider was already the leading player in the ATS business in China.
“The market for ATS presents attractive long-term growth opportunities as more commercial and industrial customers move towards autonomous or multi-source power management,” Schneider said in a statement. “This trend is driven by a more decentralized power generation world, core to Schneider Electric’s strategic focus. From an end-market perspective, the acquisition further enhances Schneider Electric’s value proposition in the end-to-end Energy Management chain for customers in Healthcare, Financial services, Datacenters and other Critical Buildings.”
Long History in Power Management
ASCO was founded in Baltimore and has a long history in power management, first introducing ATS in 1925 and later expanding into surge protection, load banks for testing and commissioning, and fire pump and control applications. ASCO’s products are sold under the brands of ASCO, Firetrol, Avtron and Froment. ASCO currently employs about 2,000 people, mainly in North America, and operates seven manufacturing sites. ASCO has 2016 revenues of $468 million with an adjusted EBITDA margin of 23 percent.
ASCO has been operating as part of Vertiv, formerly known as Emerson Network Power, which said the deal allows it to sharpen its focus and apply additional resources to its core data center, telecommunications and commercial and industrial markets.
As Vertiv has repositioned itself after being sold to Platinum Equity in November 2016, it became clear that ASCO’s strengths in the automatic transfer switch arena fell outside the new organization’s more focused strategy, said Vertiv CEO Rob Johnson.
“This sale is a significant step forward in our evolution as the premier provider of digital critical infrastructure solutions,” Johnson said. “This is consistent with our strategy of focusing on our customers and aligning the strengths of our organization – deep domain knowledge in IT and facilities applications, global scale and service coverage – to better meet their needs.”
Platinum Equity Partner Jacob Kotzubei said the deal might open strategic alternatives to Vertiv.
“Given the amount of cash proceeds expected to be generated from the sale, we will evaluate a number of capital structure alternatives that would be beneficial to all stakeholders,” said Kotzubei. “Thanks to strong leadership and the commitment of Vertiv employees around the world, the company is performing exceptionally well, and the transformation of the business is right on track. The sale of ASCO will further support those efforts and help Vertiv continue focusing on its core business.”