Israeli air-conditioning company Tadiran Holdings (TASE: TDRN) is acquiring 75% of Eliran Solar for about NIS 45 million. Subject to the completion of the deal, by the time Tadiran issues its fourth quarter 2020 financial results, the sum total for the acquisition could be adjusted by up to NIS 10 million.
On condition that Eliran Solar meets performance targets for 2021 and 2022, Tadiran will pay the seller up to an additional NIS 7.4 million. Ultimately, Tadiran will be granted a Call option to purchase the remaining 25% shares. Tadiran will invest in acquiring control in Eliran Solar, a total of about NIS 63 million.
Eliran Solar, a privately-held company that was founded in 2013, imports, plans, distributes, processes and sells products for assembling photovoltaic (PV) systems in Israel. PV systems allow the direct conversion of solar energy into electricity, thus producing savings in energy consumption and Eliran Solar provides an advanced solar energy solution from the solar panels through to installing an infrastructure of panels on roofs, optimizers that maximize electricity production from the panel and including a current converter with a function of transforming the electrical current produced in the panels, routed to a converter from a direct current to an indirect current that can be connected to the national electricity grid. Eliran Solar is fully owned by its founder and CEO Eliran Tyito (36), who will join Tadiran and manage Tadiran solar energy activities.
Tadiran controlling shareholder and CEO Moshe Mamrud said: "Tadiran is expanding its activities in the energy field in Israel, another move that represents the realization of our growth strategy. The acquisition of Eliran Solar, which leads the import, planning, distribution and trading sector for products for assembling photovoltaic systems, and which has a broad and synergistic customer base for Tadiran, gives us a foothold in the growing photovoltaic energy market and expands the value that we offer our customers. It is our intention, to leverage the core capabilities and assets that we have accrued over 60 years: a strong brand known in every household, an excellent service network, distribution and trade channels, equipment and logistics, while focusing on our core markets - households, commerce and industry. The field of solar energy is characterized by a trend of rapid growth over the past decade and due to the Ministry of Energy's targets to increase electricity production from renewable energy in the coming decade, we believe that this trend is expected to continue to intensify. Tadiran is focused on its aim of leading the markets in which it operates, including through business development and realizing its strategy plan, and the targets it has set itself for growth in the coming years."
Part of Tadiran's strategy is to expand to synergetic areas of activity in Israel such as renewable energy and thus the decision to acquire Eliran Solar. Over the past few years, there has been a continually rising trend in use of renewable energy worldwide. At the end of 2019, the installed supply of renewable energy producers in Israel stood at about 6% of the potential national consumption for that year. At the end of 2020, it is meant to be almost 10%. The government recently approved the Ministry of Energy's proposal and ways to fulfill reaching a target of 30% production of potential consumption by 2030. The Ministry of Energy estimates that in 2030 about 80% of renewable energy will be solar energy.
Eliran Solar's customers include energy companies, solar energy contractors, developers, public bodies and the like. The company does not have any one company that contributes more than 10% revenue out of its total revenue. The company has two main suppliers, the first is Chinese company Jinko, which supplies solar panels and the second is the Israeli company SolarEdge, which supplies solar invertors. The electricity production market using the PV method is divided into five types of customers: houses with gardens; the food and agricultural industry such as cowsheds, and other sheds, and chicken coops; roofs of commercial buildings; water reservoirs and huge farms.
Eliran Solar's rapid growth is reflected in its financial results: the company ended 2018 with revenue of NIS 32.9 million and tripled that amount in 2019 with revenue of NIS 115.1 million. Over the same period, operating profit rose from NIS 3.2 million to NIS 12.5 million and net profit rose from NIS 2.3 million to NIS 9.5 million. In the first three quarters of 2020, Eliran's revenue rose to NIS 158.9 million, operating profit was NIS 26.3 million, and net profit was NIS 20.2 million.
Eliran Solar Founder and CEO Eliran Tyito said: "I am very happy with this deal and I am excited to join the Tadiran family. Over the past 10 years, we have built a leading company. I believe that we are only just beginning and together with Tadiran, we can lead the company in another leap forward in the field of our activities that have so far only realized a small part of the potential contained in it."
Published by Globes, Israel business news - en.globes.co.il - on December 13, 2020
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020