Hammond Power's C$365M Deal Aims to Reshape Global Power Electronics

GUELPH, ONTARIO – February 17, 2026 – Hammond Power Solutions Inc. (TSX: HPS.A), a long-standing leader in dry-type transformers, today announced a transformative C$365 million all-cash deal to acquire AEG Power Solutions, a move poised to catapult the Canadian manufacturer into the global industrial power electronics market.

The acquisition marks a significant strategic pivot for HPS, expanding its portfolio far beyond its core transformer business. The deal, which is subject to regulatory approvals, is expected to close in the second quarter of 2026 and will be funded through a new syndicated debt arrangement.

A Transformative Leap Beyond Transformers

For decades, Hammond Power Solutions has built its reputation on the reliability of its transformers and power magnetics. This acquisition signals a fundamental shift in strategy, integrating AEG Power Solutions' deep expertise in mission-critical industrial power electronics. AEG, a global manufacturer with primary operations across Europe and Asia, specializes in industrial-grade Uninterruptible Power Supplies (UPS) and power conversion systems—technologies essential for ensuring continuous power in sectors like manufacturing, transportation, and energy.

The strategic rationale is clear: combining HPS's strength in electrical distribution components with AEG's prowess in sophisticated power quality and conversion creates a more comprehensive, integrated solutions provider. AEG Power Solutions, which generated approximately C$326 million in revenue in 2025 and employs over 780 professionals, brings five manufacturing facilities and a significant installed base, particularly in high-growth European and Asian markets.

“This transaction is an important strategic milestone for Hammond Power Solutions,” said Adrian Thomas, Chief Executive Officer of HPS, in a statement. “It strengthens our technology foundation, expands our capabilities in power electronics and integrated electrical solutions, and extends our reach across key markets.”

The deal not only broadens the product catalog but also diversifies HPS’s end-market exposure. It provides deeper access to industrial facilities, critical infrastructure projects, and the rapidly expanding energy transition sector. Furthermore, AEG’s large installed base and global aftermarket services are expected to increase HPS’s recurring revenue streams from maintenance and upgrades.

Celebrating a quarter-century as a publicly traded company, HPS views the acquisition as a cornerstone for its next phase of growth. “I can think of no better way to celebrate that legacy than by taking a meaningful strategic step that builds on what we have created together,” commented Bill Hammond, Chairman of HPS.

The Financial Underpinnings of a Bold Bet

The C$365 million enterprise value represents a significant investment for HPS. The all-cash transaction, which includes the repayment of AEG's outstanding bank debt, will be financed through a new committed syndicated debt facility. While taking on new debt for a major acquisition can raise investor concerns, HPS appears to be entering the deal from a position of considerable financial strength.

Prior to the announcement, HPS boasted a robust balance sheet. As of late 2025, the company held a low net debt position and demonstrated strong profitability, with its earnings before interest and taxes (EBIT) covering interest payments more than 40 times over. The company’s consistent cash flow generation and a debt-to-equity ratio that has been steadily decreasing provide the financial flexibility needed for such a large-scale transaction. This solid financial footing underpins the company's confidence in its ability to manage the new debt load effectively.

HPS executives project that the acquisition will be accretive to adjusted earnings per share within the first full year after closing. They also anticipate that the returns on invested capital will exceed the company's cost of capital, signaling a value-creating move for shareholders.

“This transaction reflects a disciplined approach to growth,” stated Richard Vollering, Chief Financial Officer of HPS. “We expect it to enhance our earnings and cash-flow profile while maintaining long-term balance sheet flexibility, supporting a clear path to deleveraging and continued investment in our business.”

Upon completion, AEG Power Solutions will operate as a wholly owned subsidiary of HPS, with its current leadership team, including CEO Franck Audrain, expected to remain in place to oversee daily operations, ensuring continuity for customers and employees.

Powering the Future of Energy and Industry

The timing of this acquisition aligns perfectly with powerful global trends that are reshaping energy and industrial landscapes. The combined entity is uniquely positioned to capitalize on the massive investments being made in the global energy transition, industrial digitalization, and infrastructure modernization.

AEG Power Solutions is already an active participant in the shift toward sustainable energy, providing critical power conversion technologies for green hydrogen production and solutions for integrating renewable energy sources into the grid. The global power converter market is projected to grow significantly, potentially reaching over USD 35 billion by 2030, fueled by the demand for solar, wind, and electric vehicle infrastructure.

Simultaneously, the relentless expansion of data centers, driven by AI, cloud computing, and big data, has created immense demand for high-capacity, ultra-reliable UPS systems. The industrial UPS market is forecast to grow at a steady pace, reaching over USD 12 billion by 2034. HPS has already seen a surge in orders from the data center sector, with new capacity in Mexico coming online in 2026 to meet this demand. The addition of AEG's specialized industrial UPS portfolio will create powerful synergies, allowing the combined company to offer end-to-end power solutions for these critical facilities.

“The combination of HPS and AEG Power Solutions will allow our teams to collaborate more closely, extend our global reach, and continue supporting customers with the same focus on reliability and service that they value and depend on,” said Franck Audrain, CEO of AEG Power Solutions.

Integration and the Path Forward

While the strategic and financial logic appears sound, the success of the acquisition will ultimately depend on smooth integration and navigating the regulatory landscape. HPS has a history of smaller, strategic acquisitions, such as Mesta Electronics in 2021 and Micron Industries in 2024, which have successfully expanded its power quality and control transformer capabilities. This track record suggests experience in integrating new technologies and teams into its corporate structure.

The cross-border nature of the deal, involving a Canadian acquirer and a target with significant operations in Europe and Asia, will require clearance from various competition authorities. These reviews are standard for transactions of this scale and are intended to ensure that the merger does not unduly harm competition in any specific market. HPS has stated the transaction is subject to these customary conditions.

With the transaction expected to close in the second quarter of 2026, the industry will be watching closely as HPS works to secure the necessary approvals and begins the complex but promising task of integrating AEG Power Solutions into its operations, forging a new, more powerful force in the global electrification ecosystem.