Wind tower manufacturer Tower Tech Holdings, Inc., agreed to acquire Brad Foote Works, Inc., an Illinois-based producer of gearing systems for wind energy, oil and gas, and energy-related industries. Under the terms of the transaction, Brad Foote CEO J. Cameron Drecoll, the gear manufacturer’s majority shareholder since 1996, will assume chief executive responsibilities of the combined company, while Tower Tech President and Cofounder Raymond Brickner will maintain his current role, heading up the tower business.
Brad Foote builds gear systems at two locations in Cicero, Ill., and one location in Pittsburgh, Pa.; a significant portion of its $37 million in revenue during the first six months of 2007 came from the sale of gear components to the wind industry, according to the company, which anticipates continued growth in its revenues due in part to the growth of the U.S. wind turbine market.
Under the terms of the deal, Brad Foote shareholders will receive an aggregate of 16 million shares of Tower Tech common stock and $64 million in cash as part of the consideration.
The deal comes at a time of increased interest in consolidating the wind turbine component supply chain, a trend driven by the tight market for such components. Brickner said the acquisition came as a result of Tower Tech’s desire to “have as many tools in the tool box to satisfy all of our customers.” As to whether the consolidation trend applied to the Brad Foote acquisition, he said, “I would say that’s a true statement for Tower Tech.”
Brickner, who called Tower Tech “a big promoter of U.S. components,” touted the deal for its ability to foster more domestic production for the wind industry—a trend, he said, that will both serve the industry and stimulate job growth. “There is such a great need for components,” he said. “Everyone needs to step up to the plate a little bit” so that parts do not have to be shipped from overseas. “The U.S. has got the means and leadership to do it, so there’s no reason why we shouldn’t.”
Asked whether the deal might mark the beginning of further growth and expansion, Brickner said, “Let’s just put it this way: we know there’s a lot more needed. Whatever we can do to supply component parts, we’re going to do.”
This article first appeared in the August 24th edition of Wind Energy Weekly, the weekly newsletter of the American Wind Energy Association and was reprinted with permission from the AWEA.