June 21, 2007 — nCoat, Inc. Whitsett, NC, has signed a definitive agreement to acquire all the capital stock of Metallic Ceramic Coatings Inc. (MCCI), doing business under the brand of JET-HOT Coatings. The combination of MCCI/ JET-HOT and other nCoat operating companies, at current annual revenue levels, should achieve approximately two times nCoat’s current revenue run-rate.
MCCI/JET-HOT, headquartered in Philadelphia, develops, produces and applies a variety of high performance coatings products that include insulation, corrosion resistance, and abrasion and impact resistance, as well as lubricity properties. According to Paul Clayson, CEO of nCoat, the deal “creates a highly competitive force” in coating technologies for automotive, trucking, and aerospace.
Anticipated key synergies resulting from the deal include:
1. nCoat will integrate proprietary nano-formulated coatings into the JET-HOT product mix;
2. nCoat and HPC will gain significant aftermarket branding and name
recognition via the JET-HOT brand;
3. nCoat doubles its consolidated revenue base;
4. nCoat will add immediate aftermarket cash flow to its current receivables oriented OEM revenue stream thus increasing margins, reducing customer concentration risk and leveraging the market position of both companies in motorsports and automotive markets;
5. JET-HOT formulations will enhance nCoat’s (non-nano) high performance intellectual property coatings portfolio;
6. JET-HOT will offer corrosion protection, thermal management and abrasion resistant coatings on internal engine parts to its significant aftermarket customer base. To date, JET-HOT has offered only external engine coatings to its customers;
7. HPC will strengthen its market position in diesel engine manufacturing and over-the-road trucking markets.
nCoat signed a stock purchase agreement to buy all capital stock in MCCI for $5 million cash and $1 million in nCoat common stock, or roughly one times projected 2007 revenue. Under the agreement, the acquisition is scheduled to close on June 29, 2007.