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Westport's (WPRT) Stako Acquisition to Enhance Product Portfolio

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Westport Fuel Systems Inc. (WPRT - Free Report) recently announced its decision to acquire Stako sp. z o.o., the liquid petroleum gas fuel storage manufacturing company. The transaction is estimated to be worth 5 million euros.

Poland-based Stako is a leading manufacturer of LPG fuel storage for automotive applications catering to the aftermarket and original equipment manufacturer (OEM) markets with the help of a global network of dealers. Stako’s product offering encompasses more than 1,000 models of LPG storage tanks, which have been used for years by auto biggies, such as Volkswagen AG (VWAGY - Free Report) , Hyundai (HYMLF - Free Report) and Ford (F - Free Report) , among others. Stako’s diversified product range, the traditional reliability of its products and state-of-the-art approach differentiate the company’s offerings from other manufacturers in the LPG industry.

The history of Stako — part of the Worthington Industries’ cylinder business — dates back to the 1960s when the company first started making boilers, tanks and vessels. The company has a vision to build the future of its brand based on modern and environmentally-friendly technological solutions. The company wants to continue offering reliable and innovative products, and be the most superior option in the automotive industry.

Canada-based Westport is a developer, manufacturer and supplier of advanced alternative fuel systems and components. The company’s technology and products enable the use of gaseous fuels, such as natural gas, propane, renewable natural gas or hydrogen in combustion engines. The use of natural gas instead of petroleum-based fuel reduces emissions and costs.

The adoption of stringent environmental regulations, mandating the reduction of carbon emissions globally, has opened up opportunities for Westport to boost revenues and market share. The company is banking on its market-ready products and customer base to capitalize on the opportunities to drive growth.

The heavy-duty truck sector has traditionally been arduous to decarbonize, due to the difficulty of replacing diesel without compromising on vehicle performance. However, Westport High Pressure Direct Injection (“HPDI”) 2.0 features the only natural gas technology, while retaining the performance and efficiency of a diesel engine. This essentially helps reduce greenhouse gas emissions and fuel costs by enabling heavy-duty trucks to operate on natural gas.

Westport regularly undertakes acquisitions and divestments to develop technologies and edge on non-core businesses in a bid to streamline its portfolio and boost long-term prospects. Westport’s latest deal to buy Stako is a crucial step to enhance the company’s ability to supply completely integrated fuel systems. LPG and bioLPG produce less carbon and pollutant emissions compared with diesel and petrol, and support the company’s vision to shift to cleaner fuels, especially in emerging markets.

Moreover, LPG is the most commonly-used alternative fuel in the world today, with roughly 27 million vehicles powered by it. In fact, a number of countries offer a price advantage to run an LPG vehicle compared to an equivalent model fueled by petrol or diesel. Thus, the acquisition is in sync with Westport’s goal of meeting the rising global demand for clean and cost-effective transportation solutions. In addition, the deal broadens the company’s product offering by acquiring capability for liquified petroleum gas. As a foremost global supplier of alternative fuel systems, the buyout will further strengthen the company’s position to offer a range of industry-leading solutions to prominent global OEMs.

Westport currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have skyrocketed 377.8% in the past year compared with the industry’s 26.3% rally.

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