SAN DIEGO _ Tesla plans to acquire San Diego energy storage firm Maxwell Technologies in an all-stock deal valued at $218 million, the companies announced Monday.
The $4.75 per share price tag represents a 50 percent increase over the closing price of Maxwell's shares on Friday. But it's below the $5 to $7 range that Maxwell's stock price reached several times last year.
"They are definitely paying a low price for something that I thought would have got a much better price in the open market," said Craig Irwin, an analyst with Roth Capital Partners. "I think a couple of the shareholders are angry, but I don't see that as being a route for stopping this."
Under terms of the proposal, each share of Maxwell stock will be exchanged for a fraction of a share of Tesla's stock _ which ended trading Monday at $312.89. Maxwell expects the acquisition to be completed this summer.
"Tesla is a well-respected and world-class innovator that shares a common goal of building a more sustainable future," said Franz Fink, Maxwell's president and chief executive, in a statement. "We believe this transaction is in the best interests of Maxwell stockholders and offers investors the opportunity to participate in Tesla's mission of accelerating the advent of sustainable transport and energy."
The company declined further comment.
Founded in 1965, Maxwell makes ultracapacitors. These battery-like devices store power and release it in short bursts.
They are used in hybrid electric buses, for example, to power the motor after each stop. They're also used in wind turbines to control blade pitch and prevent blades from spinning too fast.
Jed Dorsheimer, an analyst with Canaccord Genuity, said the strategic rationale behind the deal suggests Tesla "is focused on addressing the shortcomings of electric vehicle batteries through technology."
"We believe Maxwell's ultracap technology is an excellent way to harness regenerative energy for re-acceleration _ offloading the requirements of the battery, as well as other cabin functions," he said.
But Tesla also could be interested in Maxwell for a different technology _ called dry battery electrode _ that could lower its cost of manufacturing batteries used in electric vehicles.
"From talking to former employees and private companies in the space, I understand that Tesla only did diligence around the battery electrode, so it is really clear to me that Tesla bought Maxwell for the dry electrode technology," said Irwin, the Roth Capital analyst.
Dry electrode is a solvent free process used in manufacturing. While the technology is unproven for battery production, Maxwell does use it to produce ultracapacitors _ though with different binding materials, said Irwin.
"We have consistently said Tesla's only credible paths to getting cell costs much lower ... are either solvent free manufacturing or silicon anodes," he said. "We believe this transaction suggests Tesla believes Maxwell has a pathway for execution on solvent free manufacturing of battery electrodes."
In an emailed statement to TechCrunch, Tesla said it is always looking for acquisitions that make sense for the business and "support Tesla's mission to accelerate the world's transition to sustainable energy."
Maxwell employs about 100 workers in San Diego and 490 globally. The company has struggled to make a profit over the years. Through the first nine months of 2018, Maxwell posted revenue of $91.6 million _ down 8 percent from a year earlier. It reported a loss of $30 million, compared with a $34 million loss for the same period in 2017.
Tesla's plans for Maxwell's automotive ultracapacitor business remain unclear. Maxwell has inked deals with 15 car makers, including the owners of Volvo, which may balk at relying on Tesla, a competitor, for ultracapacitor supply, said Irwin.
Maxwell's shares ended trading Monday up 49.5 percent at $4.59 on the Nasdaq exchange.
