Italian based Landi Renzo is continuing its buyout program, announcing today that, through its subsidiary Landi Renzo USA Corporation, the company is to acquire 100% of California-based Baytech Corporation. The $15 million purchase comes after the launch of Landi Renzo USA earlier this year. The company said in a press release that the acquisition strengthens its presence in the United States, describing it as ‘one of the most promising markets for the development of natural gas alternative vehicles’. Landi Renzo also recently purchased Italian component manufacturer AEB for 42 million Euros.
Founded in 1991, Baytech Corporation is an “Original Equipment Small Volume Manufacturer” and a leading developer of natural gas fuel injection systems, which are EPA and CARB certified. Today Baytech develops, manufactures and sells systems for Chevrolet, GMC, Isuzu and Workhorse Custom Chassis vehicles and engines. The systems meet stringent emission standards and On Board Diagnostics II.
The press release said Baytech is the only company in the United States to own eleven CARB certifications and sixteen EPA certifications for natural gas and propane fuel injection systems for GM vehicles and heavy-duty engines. Baytech’s CARB certifications are considered particularly relevant, as they are only obtainable through a very long, complex and expensive process and are requirements in the 17 most populated states in the USA.
“We see the U.S. as a high potential market”, says Group CEO Claudio Carnevale. “The desire to reduce dependence on oil by using less polluting energy sources is pushing the U.S. towards the adoption of cleaner alternative fuels. The recent discoveries of large domestic natural gas deposits, and the availability of technology to use it, no doubt encourage the creation of all necessary conditions to complete a suitable context for the development of the sector. It should be said that under the current laws Landi Group developments in this market are, now more than ever, already possible, thanks to its established know-how. The acquisition of Baytech speeds up the development process of the sector.”
“This acquisition,” says Andrea Landi, President of Landi Renzo USA Corporation, “allows us to quickly capture market opportunities through certified platforms already in Baytech’s portfolio, allowing us to save the high costs associated with the actions and processes of obtaining certifications themselves. The Baytech know-how will also be very useful in developing and certifying gaseous fuel injection systems for platforms other than General Motors. Also thanks to our experience we can widen the scope of Baytech’s activities, giving it the capacity to provide the final customer, now mainly consisting of fleets, a turnkey project.”
Upon signature of the contract has also been the closing of the transaction, under which Landi Renzo USA Corporation has paid to Baytech shareholders, compared to a price of equity value of $15 million, the amount of $ 12.3 million, with a commitment to pay the difference of $ 2.7 million upon renewals of a group of expiring certifications.
At December 31, 2009 Baytech had a cash position of $ 412,000. On the basis of practice for such operations, the price paid will be subject to an adjustment mechanism based on the change, still to be determined, in Baytech net equity at the closing date.
The company’s total assets at December 31, 2009 amounted to $ 711,000. In 2009, Baytech generated revenues of $ 2.5 million. During the same period the adjusted (to take into account the effects of the correction of some of the material remuneration items for the owners, historically included into operational cost) profit before tax amounted to $ 928,000.
The acquisition is to be funded through the normal already granted bank credit lines.
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