Westport Innovations Inc. and Fuel Systems Solutions, Inc. jointly announced they have entered into a merger agreement to create a premier alternative fuel vehicle and engine company.
Traditionally, Westport has focused the majority of its technological development and commercialization efforts in the heavy-duty and high horsepower arena, while Fuel Systems has significant experience and focus in the light- and medium-duty products for automotive and industrial applications.
The transaction will result in a combined equity value of $351 million based on the closing trading prices for the shares of both companies on Aug. 31, 2015, and combined annual revenues ranging from $380 to $405 million projected for 2015. Annual savings and merger synergies of $30 million are expected to be achieved by 2018.
The combined company will benefit from complementary product solutions, and a fortified global footprint, with efficient operations and a core focus in developing next generation technology. Their merger combines 17 brands in the automotive and industrial space and will allow customers and stakeholders to benefit from the consolidation of technologies, and the expansion of product portfolios, OEM relationships, and global distribution networks.
Business will be conducted in more than 70 countries, representing a combined 100 years of experience and trading on both the TSX and Nasdaq under the Westport Fuel Systems name, ticker symbol Nasdaq: WPRT and TSX: WPT, with a new business unit called Fuel Systems Automotive and Industrial Group. The companies’ respective boards of directors have unanimously approved this transaction.
Combining Technology and Track Records
“The merger of these two organizations, both rich in technology innovation and with proven track records of manufacturing, production and sales, will provide greater breadth of alternative fuel systems solutions as products and development engineering to OEM partners globally,” said David Demers, CEO of Westport.
“We expect that the increased scale of products and consolidation of facilities will produce both cost-efficiencies and enhanced products, ultimately creating value for all our customers and our shareholders. This transaction marks a milestone in our strategic plans, whereby Westport will realize increased sales and significant cost efficiency opportunities while continuing to focus on the development, validation and launch of its proprietary Westport™ HPDI 2.0 and enhanced spark ignition technology.”
“After conducting a lengthy strategic evaluation process, Fuel Systems’ Strategic Oversight Committee determined that this opportunity creates significant returns for the shareholders of Fuel Systems,” stated Mariano Costamagna, CEO of Fuel Systems Solutions.
“Bringing together these two premier companies in alternative fuel technology combines our technology expertise and long-standing relationships with global OEMs, our strong shared focus on improving profitability, and aligns our corporate cultures, creating an ideal fit.
“Through this transaction, we are creating a strong platform for growth in all of our addressable markets from which to best serve our customers. Our combined businesses and brands mean increased scale and relevance both internationally and in the US. We are confident that we have found the right partner, and look forward to working together as we integrate the two companies.”