MagneGas Corporation has entered into a Letter of Intent (LOI) to acquire an as-yet-unnamed independent industrial gas and welding supply business based in San Diego for $750,000.
MagneGas is a leading technology company that counts among its inventions a patented process that converts renewable and waste liquids into the innovative MagneGas2® fuel, a replacement for acetylene.
The San Diego-based company is expected to generate more than $1m in annualised revenues for 2017. This acquisition would represent a 28% increase in MagneGas revenues compared to the company’s 2016 revenues. The upfront cash consideration for the transaction is $750,000.
“We believe that the San Diego acquisition meets all of our criteria which is a strong stable management, customer diversification, profitability and scalability, and also fits well with additional high value customers such as military and civilian shipyards”
Ermanno Santilli, CEO of MagneGas
MagneGas’s CEO, Ermanno Santilli, stated, “We’ve been successful in integrating our first industrial gas distributor, ESSI, growing it rapidly at a rate far higher than the industry average which has validated our strategy of expanding our footprint through acquisitions. We are looking to continue that momentum by acquiring additional companies with a strong customer base where we can leverage management to establish our presences and then organically grow our sales in new markets using MagneGas2® as a door opener coupled with our excellent customer service. We then plan to sell ancillary high margin products consistent with our new strategy which is a solid first step for MagneGas as we look to accelerate our growth through acquisitions.”
“We believe that the San Diego acquisition meets all of our criteria which is a strong stable management, customer diversification, profitability and scalability, and also fits well with additional high value customers such as military and civilian shipyards. California is a key market for MagneGas. It is one of the strongest adopters of clean technology, and the state is very supportive of environmentally friendly commercial technologies making it perfect to leverage our unique MagneGas2® product. In fact, we are already in the advanced stages of negotiating a very significant MagneGas2® customer with a multi-year commitment that would immediately benefit from this potentially new sales branch in San Diego. We are eager to complete this transaction and successfully execute more transactions along the West Coast in the near term.”
The company expects to close the transaction by 31st October 2017.