MagneGas Corporation, clean technology company in the renewable resources and environmental solutions industries, has acquired all the assets of Green Arc Supply L.L.C., a leading independent industrial gas and welding supply company with three locations in Texas and one in Louisiana.
The gross purchase price was $2.5m, which was comprised of a $1.0m cash payment and $1.5m in restricted common stock. All cash costs related to the transaction were paid in full with cash on hand at closing. Upon consummation of closing, the company immediately began business operations in Texas and Louisiana.
Ermanno Santilli, CEO of MagneGas, commented, “We are pleased to complete this next step in our expansion strategy.” He added, “This acquisition alone will immediately grow our revenue run rate by over 50%, when we combine this transaction with the acquisition we completed in January in San Diego, we have nearly doubled our industrial gas and welding supply revenue run rate. Moreover, this acquisition brings a deep team of highly experienced sales executives that plan to immediately leverage our MagneGas2® renewable cutting fuel to accelerate their aggressive organic growth plans going forward. We now have access to the two best industrial gas markets in the US: east Texas and southern California. In addition, we now have our second fully operational MagneGas2 production facility, located at Green Arc’s Tyler, Texas location, which will help us service the local market and further support our growth plans for 2018 and beyond.”
Scott Mahoney, Chief Financial Officer of MagneGas, stated, “This acquisition will have a significant impact on our operations from multiple perspectives.” He continued, “Adding more experienced industry sales staff with a deep and loyal customer base, that can now offer MagneGas2, is a powerful catalyst for growth in a major new market for us. We also expect to benefit in a meaningful way by adding a second MagneGas2 production facility, as it will help reduce our delivery costs to MagneGas2 distributors across the central and mid-southern regions of the US. Lastly, this acquisition now gives us a surplus of production equipment in Florida that we can immediately redeploy as we launch our German joint venture partnership in the second quarter. The fact we are nearly doubling our revenue run rate through the recent acquisitions, combined with our organic growth, should enable us to dramatically improve our cash flow, putting us on track to generate positive EBITDA in the coming quarters.”
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