Flash note: Landmark transaction transforms profitability
Intelligent Energy (IEH) has signed an agreement to acquire GTL’s energy management business, which provides energy to over 27,400 telecom towers in India, for £85m. The transaction provides a platform for the large-scale economic deployment of fuel cells as a distributed power solution and is expected to generate long-term recurring revenues worth £1.2bn of revenues over 10 years. Within three to five years, EBITDA margin for this activity is expected to rise from c 15% to 30-35%, equivalent to c £40m per year. We place our estimates and indicative valuation under review.LB Shell delivers energy solutions for the distributed energy, diesel replacement, automotive and aerial drone markets. Co. delivers energy solutions for its target markets through the development and manufacture of modular air cooled fuel cell stacks and systems. Co.'s air-cooled systems comprises of the AC64 fuel cell stack and AC10 fuel cell stack. Co. is organized into two business segments of Fuel Cell Technology, focusing on hydrogen fuel cell applications across a range of industries; and Indian Power Management (Essential Energy), which focuses on power management for telecom towers in India. Co. also operates in Japan, India, China, Singapore, and France.
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