Plug Power to Acquire Frames Group for $115M; Street Says Buy

Hydrogen fuel cell systems developer Plug Power Inc. (PLUG) recently revealed that it has entered into a definitive agreement to acquire turnkey systems integration provider Frames Group for $115 million. The deal is likely to close by the end of 2021.

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Following the news, shares of the company declined 4.4% to close at $38.95 in the extended trading session.

Terms of the Deal

Plug Power will carry out the transaction with €85 million ($98.46 million) in cash and €30M ($34.75 million) in earnouts.

Implications of the Deal

With this buyout, Plug Power strengthens its presence in Europe. Further, with Frames on board, the company’s goal of reaching an installed electrolyzer capacity of three gigawatts (GW) by 2025 will get a renewed impetus.

Moreover, the combination of Plug Power’s stack technology with Frames’ systems integration capabilities will allow the company to deliver a range of turnkey electrolyzer solutions from one megawatt (MW) containers to 1,000 MW standalone plants.

Management Commentary

The CEO of Plug Power, Andy Marsh, said, “Frames Group delivers outstanding services cost-effectively to many of the world’s largest energy providers. We look forward to our journey together, delivering value to customers around the world through our green hydrogen solutions.”

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Price Target

Recently, Morgan Stanley analyst Stephen Byrd reiterated a Buy rating on the stock with a price target of $43, which implies upside potential of 5.6% from current levels.

According to the analyst, the company is likely to witness strong growth in gross billings for the year. However, fuel delivery margins and supply chain management issues can hurt prospects of the company.

Consensus among analysts is a Strong Buy based on 12 Buys and 3 Holds. The average Plug Power price target of $43.14 implies upside potential of 5.9% from current levels. Shares have gained 103.5% over the past year.