DUBLIN - Fusion Fuel Green PLC (NASDAQ: NASDAQ:HTOO), a green hydrogen technology company, announced today it is set to acquire approximately 70% of Quality Industrial Corp. (OTC PINK: QIND), a specialist in the energy sector. The acquisition is a strategic move by Fusion Fuel to expand its full-service energy engineering business and integrate capabilities in both traditional and clean energy sectors.
The deal, expected to close shortly, will see Fusion Fuel issue 19.99% of its ordinary shares and convertible preferred shares to QIND sellers. These shares represent a 70% stake in Fusion Fuel on a fully diluted basis, pending shareholder approval for conversion of preferred shares to ordinary shares.
QIND, with headquarters in Dubai, United Arab Emirates, reported $11 million in revenue and $1.8 million in net income in 2023. Their operating business, Al Shola Gas, has seen a 19.5% increase in revenue and a 12.4% increase in net income in the nine months leading up to the fourth quarter compared to the same period in 2023.
The acquisition is expected to create synergies between Fusion Fuel's hydrogen engineering services and QIND's gas and utility expertise. It will also provide Fusion Fuel with an established, profitable foundation to serve immediate market needs while positioning for growth in the clean hydrogen sector. QIND's expansion into European markets and Fusion Fuel's extension into the Middle East are anticipated outcomes of this deal.
Fusion Fuel's CEO, Frederico Figueira de Chaves, emphasized the strategic nature of the acquisition, stating it will meet current market demands and position the company for future opportunities in the clean hydrogen sector. The integration of QIND's recurring revenue and expertise is seen as a significant advantage.
In light of recent events, Fusion Fuel's Portuguese subsidiary has filed for insolvency, which management views as an opportunity to recalibrate its business strategy. The company will focus on enhancing its hydrogen engineering and advisory offerings, which require low capital expenditure and offer scalability.
The transaction's terms are detailed in a report on Form 6-K to be filed with the SEC. The closing of the acquisition is subject to various terms and conditions, and there is no assurance that the closing will occur or that post-closing requirements will be met.
This article is based on a press release statement from Fusion Fuel Green PLC.
InvestingPro Insights
As Fusion Fuel Green PLC (NASDAQ: HTOO) moves forward with its strategic acquisition of Quality Industrial Corp., investors should consider some key financial metrics and insights from InvestingPro.
According to InvestingPro data, Fusion Fuel's market capitalization stands at a modest $6.41 million, reflecting its current position as a small-cap company in the green hydrogen sector. The company's revenue for the last twelve months as of Q4 2023 was $4.57 million, which is lower than QIND's reported $11 million revenue for 2023. This acquisition could potentially boost Fusion Fuel's top line significantly.
However, investors should note that Fusion Fuel has been facing financial challenges. An InvestingPro Tip indicates that the company is "quickly burning through cash," which aligns with the recent insolvency filing of its Portuguese subsidiary. Additionally, the company's gross profit margin for the last twelve months stands at a concerning -304.71%, suggesting significant operational inefficiencies.
Another InvestingPro Tip highlights that Fusion Fuel "operates with a significant debt burden." This is particularly relevant given the company's strategic shift and the potential financial implications of the QIND acquisition. Investors should monitor how this debt load might affect the company's ability to capitalize on the synergies expected from the merger.
It's worth noting that InvestingPro offers 18 additional tips for Fusion Fuel, providing a more comprehensive analysis for investors considering this stock. These insights could be particularly valuable as the company undergoes this significant transformation.
The stock's recent performance has been challenging, with InvestingPro data showing a -44.36% return over the past week and a -71.11% return over the last six months. This volatility underscores the importance of thorough due diligence before making investment decisions.
As Fusion Fuel Green PLC embarks on this new chapter, these financial insights from InvestingPro offer a clearer picture of the company's current standing and the potential risks and opportunities that lie ahead.
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