Danish firm to acquire Longmont-based UQM Technologies

LONGMONT — UQM Technologies Inc. (NYSE: UQM), a developer of alternative-energy technologies, has entered into a definitive merger agreement with the Danfoss Power Solutions (US) Co., a wholly owned subsidiary of Denmark-based Danfoss A/S.

Danfoss will acquire all outstanding common shares of UQM for $1.71 per share in an all-cash transaction valued at approximately $100 million, including assumption of UQM’s debt.

Danfoss, a privately owned multinational company with reported sales of 5.8 billion euros in 2017, manufactures hydraulic systems, drives, motors, and components for the automotive, aerospace, HVAC, and energy industries. The merger anticipates that UQM will become part of the Danfoss Power Solutions segment.

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The purchase price represents a premium of approximately 52.5 percent over UQM’s closing share price on Jan. 18, 2019, and a 71.4 percent premium to its weighted average trading price over the trailing 60 days. The transaction will be funded with Danfoss’ cash on hand.

Joe Mitchell, president and CEO of UQM, told BizWest that the decision to be acquired stemmed from multiple factors. First, the electrification market has become more mainstream, with major companies like Siemens and Bosch stepping up their game and making it more difficult for smaller operations like UQM to compete. Enter Danfoss, a company with a 5.8 billion Euro revenue in 2017.

“They’ve made a strategic decision to enter into the electrification market,” Mitchell said. “When they enter into a new market, their goal is to be No. 1 or No. 2 in the world. They see UQM as a big part of their strategy to do that and wanted us to be part of their portfolio. With the compeititon and to get a partner like that, it was a win for everyone.”

The merger received unanimous approval from the boards of directors of both UQM and Danfoss, according to a press release. GDG Green Dolphin LLC — which holds approximately 7.4 percent of the issued and outstanding shares of UQM — and all UQM directors and officers have executed voting and support agreements in favor of the acquisition. Closing of the transaction is subject to approval by two-thirds of UQM shareholders and by the Committee on Foreign Investment in the United States, as well as other customary closing conditions.

“We believe UQM will be an excellent addition to Danfoss as our products, business model, strategy and focus are closely aligned,” UQM president and CEO Joe Mitchell said in a prepared statement. “Being part of a larger global enterprise will greatly improve our position to compete with other international players, open doors to new markets, and provide critical resources for UQM to continue developing the highly-engineered electric propulsion products we’re known for today.

“We believe the transaction positions UQM well for the future — particularly in key geographies such as China and India, where Danfoss already operates —  and provides an attractive return for our shareholders. We’re proud of our many accomplishments and look forward to a future with Danfoss, with which we can enhance service for our customers, invest in technology, and adapt to the ever-changing dynamics of our core markets.”

Mitchell told BizWest that he expects UQM’s operations to continue in Longmont and possibly expand.

“Part of the reason they’re acquiring us is for our presence in North America,” he said. “We’re going to operate as their North American center of excellence for electrification.”

UQM has about 90 employees, almost all based in Longmont.

Kim Fausing, president & CEO of Danfoss, added, “It is a great pleasure to announce this transaction with UQM, which will position Danfoss for even stronger performance in the industries we serve. We see fast-growing demand for electric solutions within buses and trucks, off-highway vehicles, and marine markets in response to the more stringent emission regulations being imposed — stimulating interest in the efficiency and productivity gains our solutions bring. With an established North American presence, UQM will complement our global sales and manufacturing footprint nicely, further cementing our strong position in the marine as well as on- and off-highway markets. I look forward to welcoming the UQM team to Danfoss and our business.”

The transaction is expected to close in the second quarter of 2019, subject to regulatory and shareholder approval.

UQM in May 2018 withdrew efforts to seek a second-stage investment from a Chinese company after the Committee on Foreign Investment in the United States informed the company that it likely would not approve the $28.3 million deal.

UQM previously placed its 130,000-square-foot headquarters — located at 4120 Specialty Place in Weld County — on the market for $16.5 million. Mitchell said that listing will likely be removed and the building taken off the market.