Looking to continue to expand its revenue streams, MagneGas (NASDAQ:MNGA) has agreed to buy NG Enterprises Inc., a San Diego industrial gas and welding supply business, for $750,000.
The Tampa-based clean tech company last month formed MagneGas Europe, LLC for the purpose of accelerating a JV with a private European-based partner, news that was followed days later by a preliminary order from Italy.
MagneGas owns a patented process that converts different renewables and liquid wastes into fuels that can be used as alternatives to natural gas or for metal cutting. Marketed under the "MagneGas" moniker, the technology is also in the R&D stage for expanding into an array of different applications.
Elsewhere in the product bag, the company sells equipment for the sterilization of bio-contaminated liquid waste to various industrial and agricultural markets.
The company expects the acquisition will add approximately $650,000 in "high-margin industrial gas and welding supply revenues," although how accretive, if at all, the buyout is expected to be towards the bottom line was not provided. That's still not too shabby for a company that generated $2.72 million during the first nine months of 2017.
The merger will also bring four seasoned industry vets from NG to MagneGas, as well as a portfolio of clients in the shipping, military, logistics, industrial and other industries that are ripe for cross-selling MagneGas products.
The transaction is expected to close next week.
Potentially piquing investor's interests, MagneGas CEO Ermanno Santilli said that the acquisition process identified "a long-term contract opportunity for a major consumer of cutting fuel for a power plant decommissioning project that would potentially require enough quantities of MagneGas2® to justify a full-time gasification plant to be located on site at the decommissioning project at the start of the project."
Shares of MNGA have been on a long-term slide, collapsing from about $4.50 to as low as 29 cents across 2017. The stock has eked up off the December low, closing Tuesday at 33 cents. In pre-market activity Wednesday, shares climbed 12% to 37 cents following the acquisition announcement.