Minnetonka-based Communications Systems is a company that sells connectivity products for broadband networks. But on Wednesday it said it is shifting gears by buying a company that focuses on the growing home solar industry.
In the past year, Communications Systems has sold two of its business lines and plans on selling the rest as part of the strategy around buying the privately held Pineapple Energy.
The company also is adopting the Pineapple name, and its stock symbol will change from JCS to PEGY. Shares would continue to trade on Nasdaq.
“By reinventing [Communications Systems] through this proposed merger, we will set the stage to become a fast-growing and profitable company, with a focus on delivering immediate value to our shareholders while retaining an opportunity for long-term appreciation,” said Roger Lacey, the company’s executive chairman, in a news release.
A committee of Communications Systems’ board of directors has been looking at ways to enhance shareholder value for the past three years, said Lacey in a conference call announcing the Pineapple merger.
Communications Systems sold its Ecessa Corp. and Suttle Inc. businesses in the last year. In December, the company decided that the remaining business units would grow better and deliver more value to different owners.
The divestiture of the remaining businesses will fund the merger and operations of the new business.
For 2019, its most recently reported fiscal year, the company had revenue of $51 million.
Pineapple Energy was founded in 2020 by a Wayzata-based private equity firm, Northern Pacific Group, to participate in the home solar energy business. Pineapple provides solar, battery storage and other energy services to homeowners.
Pineapple acquired a solar company in December and has agreements to buy two more Hawaii-based sustainable energy companies.
“We formed Pineapple in order to meet the growing demand for green home energy services by offering customers high-quality solutions in a transparent manner,” said Scott Honour, managing partner of Northern Pacific Group, in a news release.
The merger of Communications Systems and Pineapple also means the combination of their management teams. Lacey will remain executive chairman and the company’s chief financial officer, Mark Fandrich, will maintain his role as well. Pineapple’s chief executive, Kyle Udseth, will become CEO of the combined company.
CSI shareholders would hold approximately 37% of the total shares of the new company and would get a special dividend from pre-merger divestitures.
CSI’s board has approved the merger but the deal is still subject to shareholder approval.
Patrick Kennedy • 612-673-7926