Highway Holdings Takes Strategic Step By Acquiring Majority Stake in Regent-Feinbau

In a significant move to bolster its operational capabilities, Highway Holdings Limited (NASDAQ: HIHO) has announced that it has signed a letter of intent to acquire a 51% stake in Regent-Feinbau Adermann GmbH, a prominent German manufacturer known for its precision sheet metal components and welded assemblies. This acquisition is expected to take place primarily through cash transactions and a minor issuance of unregistered shares.

Background of the Acquisition

This transaction is well-timed, as the Chinese automotive market continues to show promising growth, with projections estimating its worth at around $660 billion and a solid growth rate of over 2% expected in the next five years. This deal highlights Highway Holdings' intent to expand its footprint in the rapidly expanding automotive industry, which is critical following the challenges faced during the COVID pandemic.

Founded in 1949, Regent-Feinbau has established itself as a certified manufacturing specialist with numerous accreditations, such as IATF 16949, ISO 9001, and ISO 14001. The company's extensive experience in manufacturing high-quality, scalable solutions makes it a valuable addition to Highway Holdings. Regent-Feinbau’s core competencies include laser cutting, bending, forming technology, component assembly, and advanced welding processes. These capabilities allow the firm to cater comprehensively to OEMs and Tier 1 suppliers in various demanding sectors like automotive, aerospace, and industrial applications.

Strategic Intentions

Roland Kohl, the chairman and CEO of Highway Holdings, expressed his enthusiasm about the acquisition, emphasizing its role in rejuvenating their OEM business. He noted that Regent-Feinbau’s expertise with established automotive clients, like AMG Mercedes Benz, would significantly benefit Highway Holdings' metal component division, particularly in targeting new opportunities in China. The integration of Regent-Feinbau’s capabilities will provide Highway Holdings with access to advanced manufacturing techniques and enhance its production of thick sheet metal components, which were previously unavailable.

Furthermore, Kohl pointed out that Regent-Feinbau’s current operations in Europe stand to benefit from Highway Holdings’ strategic resources and expertise. The potential synergies from the acquisition may empower Regent-Feinbau to target high-volume component businesses that they were previously unable to approach due to resource limitations.

Financial Outlook

Highway Holdings also highlighted its robust financial position, which facilitates this acquisition and further potential investments. With approximately $5.3 million in cash and cash equivalents on hand, representing about $1.20 per share, the company is well-equipped to carry out this and potentially more strategic transactions in the future. Kohl mentioned that the acquisition of Regent-Feinbau is merely the first step in a broader M&A strategy, with additional opportunities in Germany already under evaluation.

Conclusion

Overall, this strategic acquisition is expected to propel Highway Holdings into a more competitive position in both the Chinese and European markets. As the company moves closer to finalizing this transaction, stakeholders and industry observers will be watching closely to see how this new chapter unfolds for Highway Holdings and its endeavors in the automotive sector.

For further updates on this acquisition and additional company news, please visit Highway Holdings' official website.