Power Solutions International Inc (NASDAQ: PSIX)
Power Solutions International is having an incredibly strong start to the trading session today. While we are still in the pre-market hours, the stock is up substantially, which has prompted our friends at Trade Ideas to send the alert. At the moment (8:33), PSIX is trading at $10:15 per share after a gain of 58.59% thus far today.
Why PSIX Is Gaining
Late last night in after-hours, a press release was offered showing that Power Solutions International had signed a stock purchase agreement with Weichai America Corp. According to the agreement, Weichai America plans on investing $60 million into the company in exchange for both common equity and perferred shares.
On top of the stock purchase agreement, a strategic collaboration agreement was signed between PSIX and Weichai America. The companies intend to work together to speed up the pace at which they penetrate the market with regard to the respective product lines of the two. This collaboration will extend across various geographic markets and end user segments. For PSIX, this is great news, as this collaboration will give the company access to Weichai America’s international manufacturing facilities as well as their supply chain network. In a statement, Gary Winemaster, Chairman and CEO at PSIX, had the following to offer:
“The opportunity to partner with a global leader like Weichai enables PSI to strengthen our capital structure and significantly accelerate our growth trajectory. Through this alliance, we will dramatically expand adoption of our engines and technologies for transportation, power generation, and industrial applications within our current markets, including China, the world’s largest market opportunity. In addition, through access to Weichai’s extensive and complementary product offering, we will greatly expand our range of products, increasing the size of our overall addressable market across all of our end user segments. The combination of broader and deeper product set, enhanced financial strength and expanded geographic reach will enable PSI to better serve a larger customer base and deliver long-term shareholder value. Lastly, it positions us nicely to exceed our original long-term sales target of $1 billion.”
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on PSIX. In particular, we’ll be following the relationship between this company and Weichai to see the benefit associated with the stock purchase and collaboration agreements. Of course, these agreements are huge, as they bring quite a bit of strength through the doors for both sides of the equation. We’ll continue to follow the story and bring you the news as it breaks!
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[Image Courtesy of Wikimedia]