Stem, Inc. (STEM) also acquires Energy Holdings

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Stem, Inc. (NYSE: STEM), a global leader in artificial intelligence (AI) -based energy storage software and services, and Also Energy Holdings, Inc. (“AlsoEnergy”), a global leader in software asset management firm, today announced that the companies have entered into a definitive agreement whereby Stem will acquire AlsoEnergy, in a stock and cash transaction.

Under the agreement, Stem will acquire, cashless and debt-free, all of the outstanding shares of AlsoEnergy for a total purchase price of $ 695 million, or approximately 75% of the total cash consideration and approximately 25 percent in common stock of Stem.

Overview of acquisitions

The transaction will combine Stem’s unique storage optimization capabilities with AlsoEnergy’s market-leading solar asset performance monitoring and control software to deliver a unique and compelling solution for renewable energy projects. In addition, Stem will offer its smart energy storage solutions to AlsoEnergy’s existing front-end and commercial and industrial meters. customers, who generally have a limited attachment to the storage of their solar assets today. AlsoEnergy will benefit from earlier visibility into solar and storage projects through Stem’s extensive network of customers and partners.

Founded in 2007, AlsoEnergy is headquartered in Boulder, Colorado and is a global leader in performance, analysis, monitoring and control solutions with 32.5 gigawatts (GW) of solar assets under management (AUM) in over from 50 countries. AlsoEnergy contracts with and serves multiple stakeholders in the solar ecosystem, including developers, asset owners, operations and maintenance (O&M) contractors, commercial customers, and utilities. During the twelve months ended December 31, 2020, AlsoEnergy generated approximately $ 49 million in revenue and a gross margin of 60% for its software, edge monitoring, controls and monitoring businesses. services. Among AlsoEnergy’s assets under management, both in terms of site and capacity, only a minimal amount currently has energy storage.

Management commentary

John Carrington, CEO of Stem, said: “With this immediately accretive transaction, a combination of Stem and AlsoEnergy will provide the unique software, controls and analytical capability to accelerate the energy transition to a renewable, carbon-free future. As the battery storage and solar power industries continue to experience tremendous global growth, developers, asset owners and utilities will increasingly look to our combined software capabilities to provide a platform. unified form of energy intelligence that improves project performance. The combined company will deliver an AI-powered software offering that we hope will simplify the management of our clients’ assets, increase the return on their projects, and accelerate our own growth trajectory. It is important to note that this acquisition should be immediately accretive for both gross margin and EBITDA before realizing commercial synergies, which we consider important and convincing. This acquisition underscores our commitment to expand Stem’s global reach and provide our customers with market-leading, high-margin software products.

Robert Schaefer, CEO of AlsoEnergy, said: “The combination of our business with Stem will generate tremendous value for customers as they increasingly focus on integrating solar assets and energy storage for optimize financial performance. The software, data access and technical capabilities of our combined companies will bring the next level of control and optimization to AlsoEnergy’s core monitoring offerings, enabling a single software service provider in the solar and storage landscape. . We are delighted to join the Stem team and together we believe our combined software offering will become a vital part of creating the future of the network.

Strategic and financial highlights

  • Customer value and innovation: Will enable clients to create and maximize project value faster with the combined company providing state-of-the-art controls and a Software as a Service (SaaS) solution. Customers should benefit from a single, consistent view to manage and optimize their renewable and storage assets.
  • Evolution of SaaS: Will further accelerate the growing and recurring contribution of Stem’s software revenue and margins with the addition of AlsoEnergy’s SaaS offerings. Stem will bring its unique AI-based approach to AlsoEnergy’s software to increase customer efficiency.
  • Market expansion: Will provide significant cross-selling opportunities and leverage the broad customer base of each platform. Currently, only 30% of AlsoEnergy’s customers are Stem customers, reflecting significant embedded growth opportunities.
  • Rich data set: Take advantage of a rich data set on solar power and storage operating history. Using Stem’s best AI-powered analytics platform, Athena®, and AlsoEnergy’s PowerTrack Platform, the Combined Company is expected to improve future software development and performance, while increasing the competitive differentiation of the Combined Company.
  • Large international clientele: Will expand the combined company’s geographic footprint to more than 50 countries. AlsoEnergy has a strong base of companies, developers and utility customers to further complement Stem’s existing partners and customers.

Select transaction details

The number of shares issued for the equity portion of the transaction consideration will be based on the simple average of the volume weighted average price of Stem common stock for each trading day in December 2021. The cash portion of the transaction Consideration for the transaction, which is subject to customary working capital adjustments, will be paid entirely from existing cash on Stem’s balance sheet.

The share portion of the counterparty will be issued on the basis of the exemption from registration under the Securities Act of 1933, as amended, provided for in section 4 (a) (2) thereof, and will be subject to a foreclosure of at least six months. until the period.

The transaction is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the first quarter of 2022.

Nomura Greentech served as financial advisor to Stem and Gibson, Dunn & Crutcher LLP served as legal advisor to Stem. William Blair served as financial advisor to AlsoEnergy and Goodmans LLP served as legal advisor to AlsoEnergy.

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