Hexagon Composites ASA (HEX.OL) has agreed to acquire 67% of a Brazilian entity to pursue fuel systems opportunities for transit buses and heavy-duty trucks. The company, to be named Hexagon Composites Brazil Ltda, will address market opportunities primarily in South America and Africa. The remaining 33% will be held by Tony Bermudo. The Bermudo family, owner of a leading Brazilian Compressed Natural Gas (CNG) integrator, will transfer all activities concerning bus and truck systems building into Hexagon Composites Brazil Ltda.
The global market for CNG bus systems is growing strongly due to political priorities enhanced by stable and attractive natural gas prices, combined with increasing concerns over environmental emissions and particulates. Hexagon Composites is, through Hexagon Bus Systems in Norway and Hexagon Lincoln in the U.S., the global leader in Type 4 CNG bus fuel systems, and the Brazilian footprint enhances this leadership position further.
"Brazil houses several of the world's leading OEMs with significant bus building capacity. We look forward to strengthening our relationships with customers and suppliers in the region," says Jon Erik Engeset, CEO of Hexagon Composites ASA.
"We are very happy to become part of the Hexagon Composites Group. Access to the leading tank technology on the market will significantly strengthen our competitiveness and broaden our range geographically and segment wise," says Bermudo, Managing Director of Hexagon Composites Brazil Ltda.
The initial purchase price is USD 1 million (approximately NOK 8.5 million), and Hexagon Composites will increase its ownership to 100% according to an earn-out model at a later stage. Estimated turnover for Hexagon Composites Brazil Ltda in 2016 is expected to be in the range of USD 2 million (approximately NOK 17 million) with good growth opportunities thereafter.