Worthington Enterprises Announces Planned Acquisition of Hexagon Ragasco and Sustainable Energy Solutions Joint Venture with Hexagon Composites
Worthington Enterprises (NYSE: WOR) announced two strategic agreements with Hexagon Composites ASA (OSE: HEX.OL). Worthington will acquire Hexagon Ragasco, a leader in lightweight LPG composite cylinders, for $98 million, expanding its footprint in the clean energy sector. Hexagon Ragasco reported 2023 sales of $64 million and an EBITDA of $12.7 million. The acquisition will integrate into Worthington's Building Products segment, enhancing its global cylinder manufacturing operations.
Additionally, Worthington has sold 49% of its Sustainability Energy Solutions (SES) segment to Hexagon for $10 million, forming a joint venture to focus on hydrogen and compressed natural gas storage and transport. This venture aligns with Worthington's growth strategy and aims to leverage the global clean energy transition. The joint venture is based in Europe with over 500 employees.
- Worthington's acquisition of Hexagon Ragasco for $98 million expands its portfolio in clean energy solutions.
- Hexagon Ragasco's 2023 adjusted sales were $64 million and EBITDA was $12.7 million, indicating a strong financial base for integration.
- The acquisition strengthens Worthington's position in the global LPG cylinder market, increasing its operational footprint in Europe.
- The joint venture with Hexagon Composites for $10 million provides a strategic partnership to capitalize on the hydrogen and compressed natural gas market.
- Worthington retains 49% ownership and executive management control in the SES joint venture, ensuring alignment with its growth strategy.
- The acquisition cost of $98 million for Hexagon Ragasco could pose financial strain if the expected synergies are not realized.
- The SES joint venture sell-off reduces Worthington's direct control over the segment, potentially impacting decision-making agility.
- Potential earn-out adjustments and financial performance dependencies for Hexagon Ragasco introduce uncertainty in the transaction's final cost.
Insights
The planned acquisition of Hexagon Ragasco, valued at approximately
Furthermore, the acquisition expands Worthington's operational footprint in Europe, complementing its existing facilities in Portugal. This geographic diversification strategy could help mitigate risks associated with market fluctuations in different regions. In the short term, investors can expect increased integration costs, but the long-term benefits, such as market expansion and enhanced product offerings, seem promising.
On the other hand, the joint venture with Hexagon Composites shows a strategic move towards capitalizing on the clean energy transition. By selling 49 percent of the SES segment for
Given Worthington's history of successful joint ventures, this move could lead to higher operational efficiency and innovation in their SES segment. However, investors should be aware of potential integration challenges and the need for ongoing collaboration between the two entities.
The acquisition of Hexagon Ragasco positions Worthington Enterprises favorably within the cylinder manufacturing industry. Hexagon Ragasco’s innovative lightweight and customizable LPG composite cylinders cater to diverse applications, including leisure, household and industrial uses. This acquisition not only augments Worthington’s product portfolio but also enables it to tap into Hexagon Ragasco's established market presence in over 100 countries.
This extensive market reach offers Worthington significant growth opportunities, particularly in regions where LPG usage is prevalent. Additionally, Hexagon Ragasco’s automated manufacturing capabilities in Norway could introduce advanced manufacturing techniques to Worthington, enhancing production efficiency and quality control.
The clean energy focus of the joint venture aligns well with global trends towards sustainability. By forming a joint venture with Hexagon Composites, Worthington can better position itself within the hydrogen and compressed natural gas markets, which are projected to grow as the clean energy transition accelerates. However, the success of this venture will depend on how effectively both companies can collaborate and integrate their operations.
Hexagon Ragasco’s technological advancements in LPG composite cylinders stand out. Their ability to produce lightweight, customizable and efficient cylinders is a strong addition to Worthington’s existing capabilities. The technological integration will likely drive innovation within Worthington’s product offerings, potentially leading to the development of new, advanced cylinder solutions.
The automated manufacturing facility in Raufoss, Norway, is another key asset. This facility’s high efficiency and quality-consistent production can serve as a model for Worthington’s other manufacturing sites, potentially setting new standards within the company. Moreover, integrating these advanced manufacturing techniques could reduce production costs and improve operational efficiency.
For investors, this technological enhancement represents a long-term value addition, improving Worthington’s competitive edge in the market. However, the transition and integration period could see initial costs and adjustments, which should be monitored.
COLUMBUS, Ohio, May 29, 2024 (GLOBE NEWSWIRE) -- Worthington Enterprises (NYSE: WOR), a designer and manufacturer of market-leading brands that enable people to live safer, healthier and more expressive lives, today announced the signing of two definitive agreements with Hexagon Composites ASA (OSE: HEX.OL) of Norway. One agreement is to acquire 100 percent of Hexagon Ragasco and a second agreement is to sell 49 percent of Worthington’s Sustainability Energy Solutions (SES) business segment to Hexagon Composites forming a joint venture with the company. The two transactions will extend Worthington’s global position in cylinder manufacturing and strengthen its position to capitalize on the storage, transport and distribution of gases supporting the global clean energy transition including propane (LPG), hydrogen and compressed natural gas. The formation of the joint venture was completed today, and the acquisition of Hexagon Ragasco is expected to close on or around June 3, 2024.
Acquisition of Hexagon Ragasco
Worthington plans to acquire Hexagon Ragasco, a global market leader in lightweight, customizable LPG composite cylinders used for leisure, household and industrial applications, for approximately
Hexagon Ragasco manufactures its cylinders in an automated facility in Raufoss, Norway. The company’s innovative and technology-enabled manufacturing capabilities, along with its ability to easily customize cylinders, make Hexagon Ragasco’s cylinders among the most efficiently produced and quality-consistent composite LPG cylinders in the world. The addition of Hexagon Ragasco furthers Worthington’s interests in advancing the use of clean fuels as part of the global energy transition.
Hexagon Ragasco will become part of the Building Products segment at Worthington Enterprises that delivers products and solutions for heating, cooling, construction and water applications worldwide. Worthington Enterprises is one of the world’s leading manufacturers of cylinders for these markets. The planned acquisition also expands the Company’s operational footprint in Europe where its Amtrol-Alfa facility in Portugal makes a wide range of cylinders.
“Hexagon Ragasco is one of the pioneers of the composite cylinder,” said Jimmy Bowes, president, Building Products, Worthington Enterprises. “They’ve been bringing innovative products to the market for more than 20 years that are raising expectations of the performance, quality and capabilities of an LPG cylinder. We’ve followed their growth closely and believe that their composite cylinders are a great complement to our existing cylinder business. We can’t wait to get started with the exceptional team at Hexagon Ragasco.”
Creation of Worthington Enterprises and Hexagon Composites Joint Venture
Hexagon Composites acquired 49 percent of Worthington’s SES business segment for approximately
Andy Rose, president and chief executive officer, Worthington Enterprises, said, “The creation of a joint venture with Hexagon is an opportunity to bring in an experienced partner and work together to develop the next phase of the SES business in an evolving marketplace. Their investment reflects the strength of our reputation, achievements to date and the potential of the business. We are grateful to our SES team for their dedication, and we look forward to continuing to support their efforts.”
Worthington Enterprises has a long history of effectively leveraging joint ventures as part of its growth strategy bringing together two partners to make a business stronger and more successful. Currently, the Company participates in two primary joint ventures. Worthington Armstrong Venture (WAVE)Armstrong Venture (WAVE), which was formed in 1992, provides ceiling solutions for commercial and residential locations, and ClarkDietrich, which was formed in 2011, offers products and services for cold-formed steel framing and drywall/plastering finishing systems.
A presentation with more information on the transactions can be found on the investor relations section of the Company’s website.
About Worthington Enterprises
Worthington Enterprises (NYSE: WOR) is a designer and manufacturer of market-leading brands that help enable people to live safer, healthier and more expressive lives. The Company operates with three business segments: Building Products, Consumer Products and Sustainable Energy Solutions. Worthington’s emphasis on innovation and transformation extends to building products including heating and cooling solutions, water systems, architectural and acoustical grid ceilings and metal framing and accessories, and consumer products in tools, outdoor living and celebrations categories sold under brand names Balloon Time®, Bernzomatic®, Coleman®, Garden-Weasel®, General®, HALO™, Hawkeye™, Level5 Tools®, Mag Torch®, Pactool International® and Well-X-Trol®. The Company serves the growing global hydrogen ecosystem through on-board fueling systems and gas containment solutions.
Headquartered in Columbus, Ohio, Worthington Enterprises employs approximately 5,000 people throughout North America and Europe.
Founded in 1955 as Worthington Industries, Worthington Enterprises follows a people-first Philosophy with earning money for its shareholders as its first corporate goal. Worthington Enterprises achieves this outcome by empowering its employees to innovate, thrive and grow with leading brands in attractive markets that improve everyday life. The Company engages deeply with local communities where it has operations through volunteer efforts and The Worthington Companies Foundation, participates actively in workforce development programs and reports annually on its corporate citizenship and sustainability efforts. For more information, visit worthingtonenterprises.com.
Forward-Looking Statements
Statements by Worthington Enterprises that are not limited to historical information constitute “forward-looking statements” under federal securities laws. Forward-looking statements are subject to various risks, uncertainties and other factors that may cause actual results to differ materially from those expected by Worthington Enterprises. Readers should evaluate forward-looking statements in the context of such risks, uncertainties and other factors, many of which are described in Worthington Enterprises’ filings with the Securities and Exchange Commission (“SEC”). Forward-looking statements are qualified by the cautionary statements included in Worthington Enterprises’ SEC filings and other public communications. This press release speaks only as of the date hereof. Worthington Enterprises does not undertake any obligation to update or revise its forward-looking statements except as required by applicable law or regulation.
Sonya L. Higginbotham
Senior Vice President
Chief of Corporate Affairs, Communications and Sustainability
614.438.7391
sonya.higginbotham@wthg.com
Marcus A. Rogier
Treasurer and Investor Relations Officer
614.840.4663
marcus.rogier@wthg.com
200 West Old Wilson Bridge Rd.
Columbus, Ohio 43085
WorthingtonEnterprises.com
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/9cb8cd7b-f5c0-4668-9a59-3743969476c0
FAQ
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