Remember the halcyon days where the biggest global concern was the warming planet? It seems like a long time ago, but it was maybe a month ago. It’s true that the decreased boat traffic through the waterways of Venice have let some of the sediment settle, leaving the canals looking clean. The lack of intercontinental cruise-ship travel has slowed the spread of invasive species. Yet, despite claims that the earth is starting to slowly encroach on human dominion once again, the climate isn’t really improving. We still have all the same problems—it’s just that the news media (guilty!) has a brand new shiny story to direct our attention so we can direct your attention.
But there’s something going unsaid and overlooked in this time of the coronavirus, and that this is represents a significant opportunity to do right by the planet. Consider for a moment that the skies in the Hubei province of China are cleaner and clearer because of the lack of pollution regularly pounding the skies. We all know that when the vaccine is invented, mass-produced and proliferated, or we reach some critical mass of people who have passed through the ordeal of infection that the threat of it is diminished, that the lights are coming back on in the world’s biggest polluters. As long as the potential profits from destroying our planet outweigh the costs, we will continue. We’re that dumb. But we don’t need to be.
Maybe it’s time we started taking a serious look at alternative energy?
With that out there let’s turn our attention to CUI Global (CUI.Q), which is getting into solar construction with today’s acquisition of Reach Construction Group.
Reach is an engineering, procurement and construction company involved in the renewable energy sector. They’re involved in more than just solar, having extended their range to include excavation for fibre optic lines and commercial construction. They have a contractual backlog for 2020 exceeding $100 million, and the acquisition is expected to be immediately accretive to CUI’s consolidated results.
“Reach is a recognized market leader in providing renewable energy EPC services and the leadership team has over 50 years of combined industry experience successfully delivering renewable energy projects to their customers, We are very pleased to expand CUI’s infrastructure energy services into the growing renewable energy market, as well as to play a key role in reducing carbon emissions in the country. This acquisition also provides a solid platform for us to diversify into synergistic services that serve the electric power industry,” said Jim O’Neil, vice chairman and CEO of CUI Global.
Reach Construction Group is expected to deliver several strategic benefits, including:
- Expanding CUI Global’s energy services business into the rapidly growing alternative energy industry, particularly building on Reach’s established relationships that currently exist with solar developers and panel manufacturers in the utility scale solar market;
- Diversifying Reach’s current capabilities into a broader set of service offerings in the energy infrastructure market; and,
- Enhancing CUI’s revenue while contributing positive net earnings.
CUI Global’s success comes through their M&A and development of innovative companies to create a diversified energy infrastructure services platform. Their energy business also includes traditional energy sources, with a subsidiary called Orbital Gas Systems that boasts more than 30 years of experience in design, installation and the commissioning of industrial gas sampling, measurement and delivery systems providing solutions to the energy, power and processing markets.
The transaction will consist of third-party debt and company equity valued at approximately $37 million (excluding working capital and certain other adjustments upon closing). The acquisition is expected to close within the next 20 days, subject to customary closing conditions.
—Joseph Morton