An industrial battery manufacturer is set to close in early October on the acquisition of NorthStar Battery parent company N Holding AB – a transaction that impacts two Springfield plants.
Reading, Pennsylvania-based EnerSys (NYSE: ENS) announced the deal Sept. 19 with expectations the acquisition will close within 15 days. EnerSys is purchasing Stockholm, Sweden-based N Holding for $78 million, as well as the assumption of $104.5 million in debt, from private equity firm Altor Fund II. Altor Fund II has owned NorthStar since 2007.
Included in the purchase are two Springfield plants, at 4000 E. Continental Way, in Partnership Industrial Center, and 1320 N. Alliance Ave., in PIC West. All of NorthStar’s batteries are manufactured in the Queen City across a combined 600,000 square feet of plant space. The plant in PIC West, which opened in 2010, is 320,000 square feet. It was not fully built out and will allow EnerSys to use excess floor space for its thin plate pure lead battery production, said Steve Heir, EnerSys vice president of business development.
“We have to install capital equipment, and the lead times on that will be in the region of six months. That will align the products in the two factories to be an EnerSys product,” Heir said of the company’s Springfield plant plans.
He added the NorthStar company name will remain following the transaction closing.
Although Heir declined to disclose the plant investment, Hans Liden, NorthStar CEO, said EnerSys “will invest millions into our current facilities.”
That investment also will involve the workforce, as Heir said an undisclosed number of employees would be added once the production line equipment is installed. Liden said NorthStar, which also has regional offices in Sweden, China and United Arab Emirates, currently employs 640 companywide, with 600 working in Springfield. Upon the purchase, EnerSys will employ over 10,300 companywide, Heir said.
NorthStar’s local employment numbers have been on the rise in recent years, as around 450 combined worked in the plants three years ago, according to Springfield Business Journal archives. The company generated $157 million in revenue for the 12-month period ending Aug. 31, officials said.
Heir said the thin plate pure lead batteries would be produced via an automated and digitized high-speed production line, which can produce batteries about three times faster than existing production lines. He noted the technology, which adds $175 million of production capacity, is about 20 years newer than what is currently in use at the NorthStar plants.
EnerSys already operates one plant in Missouri – a manufacturing facility in Warrensburg acquired in 2002, Heir said.
That plant, which employs around 600, originally was slated for the high-speed production line. However, Heir said it would have required removing two existing production lines to accommodate it. Acquiring NorthStar no longer makes that necessary and saves around $100 million of manufacturing capacity, he added.
“It will align the manufacturing product of NorthStar’s to that of EnerSys that is made in Warrensburg,” Heir said.
Liden, who is based in NorthStar’s Sweden headquarters, said EnerSys has near identical technology for battery manufacturing and together the companies should expand on the customer base.
“The timing is absolutely right,” Liden said. “We can provide volume for them.”
Declining to disclose the amount of batteries NorthStar produces annually, Liden said the plants currently are capable of manufacturing 1.5 million batteries a year. Once the high-speed line is operational, he said the annual total should exceed 2 million batteries.
Both NorthStar and EnerSys produce reserve power batteries for industrial applications. Among customers are those in telecommunication and utility industries. City Utilities is among local customers for NorthStar, and Liden said the company is in the middle of a $500 million, seven-year agreement with Daimler Trucks North America.
EnerSys initiated the acquisition discussions in March, Heir said, noting the company was optimistic Altor Fund II would sell. He said private equity firms typically turn an investment in four to six years, and Altor had held the business for 12 years.
“They were overaged in terms of that investment,” he said. “We felt that the timing was probably right.”
While EnerSys was considering other acquisitions earlier in the year, Heir said NorthStar was the only lead-acid battery manufacturing company of interest.
Both companies’ products have a worldwide reach. EnerSys has customers in over 100 countries, while NorthStar products are used in more than 150 countries, according to the company websites.
Liden said 50%-60% of NorthStar’s battery production is exported internationally. Similarly, Heir said about half of EnerSys’ thin plate pure lead battery production in Europe is being exported to the United States.
“That’s where the majority of the synergy savings come from is to manufacture the batteries local to where you sell them,” Heir said.
“For NorthStar, for Springfield, this is absolutely the best thing that could happen,” Liden said, noting a positive response from the investor market.
The day after the acquisition announcement, ENS shares gained 8.4% to close Sept. 20 at $68.07 per share. The shares closed Sept. 25 at $67.13, compared with a 52-week range of $53.56 to $89.83.
Outside of the U.S., EnerSys operates regional headquarters in Zug, Switzerland, and Singapore, according to its website. In its most recent financial report, first quarter fiscal 2020 net sales were $780.2 million, a 16% increase from $670.9 million a year prior.
As part of the $168 million bond issue voters approved in April 2019, Springfield Public Schools is developing an early childhood center near Carver Middle School.
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