Westport Fuel To Divest CNG Compressor Business For EUR 12.5M

Westport Fuel Systems Inc. (NASDAQ:WPRT) has entered into an agreement to sell its Cherasco, Italy-based compressed natural gas (“CNG”) compressor business to Snam S.p.A. (“Snam”). Subject to closing conditions, the divestment is anticipated to close by the end of July for a cash price of €12.5 million. Snam is one of the leading gas-utility companies in Europe.

The divestiture will help Westport Fuel to streamline its product offerings and focus more on providing alternative-fuel vehicle components and systems to the transportation sector.

Per management, the sale of the business will enable the company to concentrate on growing its core business and offer innovative products in the market for alternative-fuel solutions. Moreover, the divestment will strengthen its balance sheet.

Westport Fuel Systems Inc. Price and Consensus

CoveView Advisors LLC served as financial advisor for Westport Fuel on the transaction while Latham & Watkins acted as legal advisor.

After the transaction, results of CNG compressor business will be added to discontinued operations for the full-year 2018. Further, the company has revised its consolidated revenue guidance from continuing operations to $235-$255 million for 2018.

Earlier, in June 2017, the company announced the second divestiture of its industrial business. It sold assets of its Impco Industrial Mobile and Stationary Equipment business for $17.5 million. While in May 2017, the company sold assets of IMPCO Auxiliary Power Unit business, which generated net proceeds of around $60 million. In 2017, Westport Fuel sold its industrial business assets for gross proceeds of $87.5 million.

Price Performance

In a month’s time, Westport Fuel’s stock has moved up 34.1%, outperforming 3.4% increase of the industry it belongs to.

Zacks Rank & Other Stocks to Consider

Westport Fuel currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space are General Motors Company (NYSE:GM) , Magna International Inc. (NYSE:MGA) and BMW AG BAMXF, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Motors has an expected long-term growth rate of 5.5%. Shares of the company have risen 14.8% over the past year.

Magna International has an expected long-term growth rate of 8.5%. In a year’s time, shares of the company have gained 45.7%.

BMW has an expected long-term growth rate of 4.5%. Shares of the company have risen 12.9% over the past year.

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