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Westport, Impco Parent FSSI to Merge

September 1, 2015 in Companies, NGVs by Rich Piellisch  |  No Comments

‘Will Create a Premier Alternative Fuel Vehicle and Engine
Company With Expanded Product and Technology Portfolio’
With Joint Projected Revenues This Year of Some $400 Million

Westport Innovations and Impco parent Fuel Systems Solutions, Inc. said this morning that they’ve agreed to merge “to create a premier alternative fuel vehicle and engine company.” updated September 2

Westport Innovations and Fuel Systems Solutions, Inc. said today that they plan tom merge, projecting combined 2015 revenue ranging from $380 million to $405 million.

Westport Innovations and Fuel Systems Solutions, Inc. said today that they plan to merge, projecting combined 2015 revenue ranging from $380 million to $405 million.

The combined Westport Fuel Systems will have an equity value of $351 million based on yesterday’s closing share prices, with projected combined annual revenues for 2015 ranging from $380 million to $405 million.

The combined company will do business in more than 70 countries, states this morning’s release. “The merger will create a premier alternative fuel vehicle and engine company with expanded product and technology portfolio,” the firms say, with “scale and positioning to compete effectively, grow, and deliver strong shareholder returns as markets improve.”

According to Westport CEO David Demers, as quoted in the release,

  • “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…
  • “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.”

According to Fuel Systems Solutions CEO Mariano Costamagna, as quoted in the release,

  • “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…
  • “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 U.S. We are confident that we have found the right partner, and look forward to working together as we integrate the two companies.”

The merger will result in savings and synergies amounting to some $30 million per year by 2018, the firms say.

“Under the terms of the merger,” states the release, “Westport will acquire all of the outstanding shares of Fuel Systems common stock in a stock-for-stock transaction under which Fuel Systems shareholders will receive 2.129 Westport shares for each share of Fuel Systems common stock they own at closing, representing a 10% premium to Fuel Systems shareholders based on the closing trading prices of Westport’s and Fuel Systems’ shares on August 31, 2015 or an implied value to Fuel Systems shareholders of $7.54 per share.”

From Light to Heavy and Even High Horsepower

“Following closing, existing Westport shareholders will hold approximately 64% of the combined company and Fuel Systems shareholders 36% of the combined company on a fully diluted basis.”

“The combined company’s product development efforts will span passenger car to heavy-duty trucks to locomotives and marine applications to stationary power.”

Also according to the announcement, strategic highlights of the merger include:

  • Increased scale and opportunity to better serve customers – The combined company will have a broad global reach, with increased scale and product diversity enhancing the ability to serve some of the world’s largest and fastest growing markets through a fortified geographic footprint, greater product diversity, and a leading distribution network spanning 70 countries.
  • Complementary R&D – The merger would combine Westport’s development expertise in medium- and heavy-duty and high horsepower applications with Fuel Systems’ core focus and development efforts in automotive and industrial applications. Together, the combined technological expertise and future product development will span passenger car to heavy-duty trucks to locomotives and from marine applications to stationary power.
  • Complementary product mix and customer sets – Westport and Fuel Systems will combine their industry experience and complementary portfolio of products and technologies, resulting in a comprehensive solutions offering across light- and heavy-duty transportation applications and industrial-focused applications. The complementary customer bases and communities will be served with combined asset base and state-of-the-art facilities strategically located across five continents and a shared commitment to providing exceptional products, service and related solutions.
  • Broadens OEM relationships – Fuel Systems brings long standing relationships with several key global OEMs, including but not limited to General Motors, Ford, Nissan, Kia Motors, Subaru/Fuji Heavy Industries, and Mitsubishi. Westport has key relationships with complementary global OEMs, including but not limited to Volvo Car, Volkswagen, Fiat Chrysler, Tata Motors, GAZ Group, Paccer, Daimler, Weichai, Cummins, Ford, and Volvo AB.
  • Leveraging combined track record of innovation and highly skilled employee base – The companies expect that their proven track records of product development will strengthen as a result of the combination, and benefit from capital-efficient and optimized research and development programs and a highly skilled employee base. The companies believe that as a combined company they will be well positioned to create a stronger innovation platform to invest in developing new products and new technologies, and will be positioned to fuel future growth better than either company on a standalone basis.
  • High-Value IP Portfolio – Both companies have a long history of technology innovation and engineering capabilities, which have garnered the interest and demand from global vehicle and engine OEMs. The combined company will have filed over 500 patents in CNG/LNG/LPG parts and systems worldwide. This combination of a strong intellectual property position, prolific development and commercialization efforts will help expand the product pipeline for the industry.

Source: Westport and FSSI with Fleets & Fuels follow-up

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