Westport Innovations acquires alt fuel systems company Prins Autogassystemen for €12.2M

3 December 2014

Natural gas engine and vehicle company Westport Innovations Inc. has acquired Netherlands based Prins Autogassystemen Holding B.V. for €12.2 million (US$15.1 million) through a combination of €6.6 million (US$8.2 million) in assumed liabilities and €5.6 million (US$6.9 million) in cash.

Founded in 1986, Prins is a leading developer of high quality alternative fuel systems powered by liquefied petroleum gas (LPG or propane), compressed natural gas (CNG), and liquefied natural gas (LNG) for light-, medium-, and heavy-duty applications. Prins operations in Europe will be combined under the Westport Applied Technologies business unit.

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Prins offers a full suite of alternative fuel systems for bi-fuel, mono-fuel, and dual-fuel applications using LPG, CNG, and LNG. Prins’ dual-fuel system—including its fuel controller software developed in-house—is an add-on system for diesel engines with more than 100 calibrations for LPG, CNG, and LNG to optimize the diesel replacement rate.

In collaboration with Keihin Corporation of Japan, a leading manufacturer of Original Equipement (OE) fuel systems, Prins developed an advanced sequential vapor gas injection system (VSI). This system is suitable for both LPG and CNG applications and indirect as well as direct injection engines (VSI-DI).

Prins also collaborates with other technology partners such as Bosch, Continental and several technical universities. Prins has been able to develop systems for the latest families of direct injection engines with direct liquid gas injection: Direct LiquiMax for LPG applications. For the medium- and heavy- duty vehicle segment, Prins has developed Dieselblend, in which diesel is used with LPG, CNG or LNG in an optimal mix ratio for the most reliable and optimal drivability.

In October, a Prins technology paper presented at the 2013 Global Technology Conference (GTC) in London “Development of Dual Fuel technology: Prins Dieselblend-2.0 system enabling heavy duty vehicles driving on LP Gas” was the overall winner of the 2014 WLPGA Innovation award.

Prins’ globally respected product line, their strong track record in continuous innovation and new product introductions combined with its Original Equipment Manufacturer (OEM) relationships complement our products and OEM coverage to provide us with a great position as the go-to partner for alternative fuels solutions. Westport has a great deal of experience with natural gas direct injection and believes that the combination of Prins’ and Westport’s team and technologies will further strengthen Westport’s dominant technology portfolio.

Its global distribution network sells to end customers in more than 50 countries through OEMs, country importers, and distributors. The company reported €19.7 million (US$26.8 million) in revenue for the nine months ended 30 September 2014 compared with €15.1 million (US$20.1 million) for same period last year.

Reported EBITDA was €1.5 million (US$2.0 million) for the nine months ended 30 September 2014 compared with €0.4 million (US$0.5 million) for same period last year.

Westport expects a number of synergies with the acquisition:

• Products. Prins’ alternative fuel systems will expand Westport’s product portfolio to include direct injection technology for LPG and CNG systems, and a well developed portfolio of diesel dual fuel aftermarket systems.

• Sales. Prins’ relationships with global OEMs complement Westport’s existing strength in Europe, Asia, and North America and will allow for increased cross-channel sales.

• Geographies. Prins’ established footprint in large emerging markets for alternative fuels including Turkey and Africa opens access to new markets for Westport’s products.

• Operations. Larger scale allows Westport and Prins to capture cost efficiencies.

As a vehicle fuel, LPG—also known as propane or autogas—is relatively clean burning, easy to store and transport, has high energy content, and is widely available in many countries. LPG has a broad application of uses including home heating, agriculture, petrochemicals, and industrial as well as automotive.

According to the World LPG Association (WLPGA), global consumption of autogas has been rising rapidly in recent years, reaching 25.8 million tonnes in 2013—an increase of 9.4 Mt, or 57%, over the 2003 level. There are now almost 25 million autogas vehicles in use around the world. Five countries—Korea, Turkey, Russia, Poland and Italy—together accounted for half of global autogas consumption in 2013.

Navigant Research indicates that in 2012, 1 million light-, medium- and heavy-duty vehicles were converted to run on LPG in the world, including 449,000 vehicles in Europe. This is forecasted to grow to 1.4 million in new vehicle sales and conversions in 2020.

While global sales of light duty LPG vehicles are projected to grow by 2.6% annually from 2014 to 2035, the Middle East and Africa will show faster growth at 4.7% CAGR, according to the forecast. In North America, the annual growth rate of all LPG vehicle sales and conversions will average 4.7% between 2014 and 2035.

Westport does not expect material influence on 2014 revenue or earnings as a result of this transaction due to the timing of closing. Westport expects strong synergies and accretive earnings performance in 2015.