Stem Inc. (NYSE: STEM), a San Francisco-based provider of artificial-intelligence-driven energy-story software, has agreed to acquire Boulder-based Also Energy Holdings Inc. for $695 million in cash and stock.
The transaction is expected to close in the first quarter of 2022, pending regulatory approval. Shareholders of both companies have already approved the deal.
AlsoEnergy provides solar asset management software, which will be combined with Stem’s storage-optimization capabilities, providing a “one-stop-shop solution for renewable energy projects.”
While Stem’s customer base is largely in North America, AlsoEnergy brings a wider geographic reach.
“AlsoEnergy scales our geographic reach significantly, with assets under management in over 50 countries.” Stem CEO John Carrington said in a Thursday morning webcast announcing the deal. “It also opens up a new set of customers for solar and storage cross selling, as only 30% of our customer relationships overlap.”
AlsoEnergy recorded revenue of $49 million in 2020, with a 60% gross margin across its software, grid-edge monitoring, controls and services businesses, the companies said.
AlsoEnergy employs 300 workers, including 90 software engineers, an attractive element in the acquisition, Carrington said, given competition for software talent.
“What’s really compelling for us is that they have over 300 employees, 90 of which are software developers,” Carrington said.
Carrington also noted that AlsoEnergy manufactures hardware, potentially providing additional synergies going forward, with Stem currently outsourcing some manufacturing services.
“We’re very excited about what we can collectively do together,” Carrington said. “
Additionally, the companies complement one another in terms of their customer base, Carrington said.
“In evaluating our respective customer accounts, we estimate there is only a 30% overlap in customer relationships,” Carrington said.
While both companies serve customers such as Amazon, Goldman Sachs, Altus Power and CleanCapital, many other customer relationships don’t overlap, allowing the companies to bring many new customers into a combined operation.
AlsoEnergy boasts 32.5 gigawatts of solar assets under management.
AlsoEnergy CEO Robert Schaefer said in a prepared statement that the combination with Stem “will unlock tremendous value for customers as they increasingly focus on integrating solar and energy storage assets to optimize financial performance.”
The $695 million purchase price includes 75% cash, or $521 million, with the balance to be paid in approximately 9 million shares of Stem common stock.
Nomura Greentech served as financial adviser to Stem. Gibson, Dunn & Crutcher LLP served as legal adviser to Stem. William Blair served as financial adviser to AlsoEnergy and Goodmans LLP served as legal adviser to AlsoEnergy.
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