GSE Solutions to be acquired by Pelican Energy Partners in all-cash deal

In a pivotal move within the clean-energy sector, GSE Solutions, formally known as GSE Systems, Inc. (Nasdaq: GVP), has announced it will be acquired by Pelican Energy Partners in an all-cash transaction valued at $4.10 per share. This offer, representing a premium of approximately 50% over GSE’s closing share price as of August 7, 2024, underscores the strategic importance of this deal in the evolving energy market. The merger agreement, which has received unanimous approval from GSE’s board of directors, is anticipated to close in the third or fourth quarter of 2024, pending shareholder approval and the satisfaction of other customary closing conditions.

Significance of the Merger

GSE Solutions, a prominent player in advanced engineering solutions, supports various clean-energy production and decarbonisation initiatives within the power industry. The company’s focus on nuclear energy solutions aligns with Pelican Energy Partners’ strategic goals to expand its portfolio in the energy sector. The acquisition reflects a broader trend of consolidation in the clean energy and nuclear sectors, driven by the growing demand for sustainable energy solutions and advancements in technology.

Kathryn O’Connor Gardner, Chair of the Board at GSE Solutions, highlighted the strategic nature of the transaction. She stated that while the nuclear industry has strong long-term prospects, the current business environment necessitates this merger to enhance shareholder value. Gardner emphasised that the deal would position GSE to better navigate the rapid growth and competitive pressures in the power industry, ensuring a more resilient and innovative future.

Leadership Insights

Ravi Khanna, President and CEO of GSE Solutions, expressed his sentiments about the merger, acknowledging the dedicated shareholders and skilled workforce that have been integral to the company’s success. Khanna underscored the merger as a strategic move to maximize shareholder value while continuing to support GSE’s customers with enhanced resources provided by Pelican. His comments reflect a commitment to leveraging the merger for continued excellence in engineering and technology solutions.

Sam Veselka, Managing Director of Pelican Energy Partners, outlined Pelican’s vision for the future of GSE Solutions post-acquisition. Veselka noted that Pelican, as a private company, would offer GSE greater flexibility to pursue growth initiatives and invest in technology. This perspective highlights Pelican’s strategy of utilising its growth equity approach to support and expand nuclear energy services, benefiting both new plant developments and upgrades to existing facilities.

Broader Industry Context

This acquisition aligns with the ongoing trend of increased investment in clean and nuclear energy sectors. The global shift towards reducing carbon emissions and advancing sustainable energy solutions has driven significant consolidation and investment within these industries. Companies like Pelican Energy Partners are strategically positioning themselves to capitalize on these trends, with a focus on enhancing technological capabilities and expanding market presence.

Transaction Details and Approvals

The merger is expected to be completed in late 2024, subject to GSE’s shareholder approval and the satisfaction of other standard closing conditions. The transaction does not hinge on a financing condition, ensuring its progression without financial constraints. Upon completion, GSE will transition to a private entity, with its shares delisted from the Nasdaq.

GSE’s Board of Directors has recommended that shareholders vote in favour of the merger at an upcoming Special Meeting of Stockholders. This recommendation underscores the board’s confidence in the strategic benefits of the transaction.

Baird is serving as GSE’s exclusive financial advisor, while legal support is provided by Miles & Stockbridge P.C. and Potter Anderson Corroon LLP. Ankura has issued a fairness opinion to GSE’s Board. On the other side, Locke Lord LLP is representing Pelican Energy Partners.