MagneGas Corporation has executed a binding agreement to acquire all of the assets of San Diego based NG Enterprises Inc. for $750,000.
The acquisition is expected to add approximately $650,000 in high-margin industrial gas and welding supply revenues. The acquisition also adds four highly experienced industry experts, and enables access to an extensive list of clients in the shipping, military, logistics, industrial and other industries, which represent prospective clients for MagneGas2® cross sales.
The binding agreement, includes a deposit for $300,000. The remainder of the purchase price is due at final closing, which is planned for the second week of January 2018.
Ermanno Santilli, CEO of MagneGas, said, “We are very pleased to take this first step in the expansion of MagneGas’ welding supply and gas distribution business outside of Florida.”
He continued, “The greater California market is one of the two strongest markets in the US for industrial gas and welding supplies. We believe San Diego has the potential to be one of the key markets in California for MagneGas2 given the proximity to Coronado Island and the massive US military presence, as well as a wide range of utility, commercial shipping, rail, logistics and infrastructure operators in the bay area. We see this as a very compelling acquisition that will help further accelerate our growth and profitability.”
Santilli continued, “As we have advanced this acquisition opportunity towards closing, we have already identified a long-term contract opportunity for a major consumer of cutting fuel for a power plant decommissioning project that would potentially require enough quantities of MagneGas2 to justify a full-time gasification plant to be located on-site at the decommissioning project at the start of the project. This decommissioning project has the potential to immediately accelerate revenue growth in our new San Diego operations, and is another excellent example of the power of our technology and our MagneGas2 product offering to compete in a massive global industry.”
Scott Mahoney, CFO of MagneGas commented, “ESSI, has been a major success as our first industrial gas and welding supply acquisition.”
“For the past three years, we have been very successful in driving revenue growth, with a compound annual growth rate of approximately 52%. When compared to the industry norm, which is approximately 2-3%, we are clearly leveraging our technology to drive overall growth, take market share away from the major players in Florida, distribute MagneGas2 to wholesale distributors across the eastern US, and drive unit sales into Europe.”
He added, “Our acquisition strategy is very clear. We seek to leverage our proprietary and fundamentally superior cutting fuel product, MagneGas2, to aggressively take market share in the two best markets in the country. By acquiring companies such as NG Enterprises, we can benefit from an immediate customer base, an experienced sales force, and the ability to cross sell non-proprietary gases and hard goods to maximise the revenue impact from our acquisitions. We are excited to complete what we expect to be the first of many acquisitions to come in these critical markets. This is a key part of our plan to accelerate revenues and drive cash flows in 2018 and beyond.”