Microcap Highway Holdings Eyes German Manufacturer In Growth Bet

Highway Holdings Limited (NASDAQ:HIHO) stock rose Tuesday after the company inked a nonbinding letter of intent with LeMALe Beteiligungs-GmbH to acquire a 51% stake in Germany-based Regent-Feinbau Adermann GmbH.

Details

Management disclosed that it is well-positioned financially to complete the Regent-Feinbau acquisition and pursue further deals, with minimal debt and about $5.3 million in cash and equivalents, or roughly $1.20 per share.

The company plans to primarily fund the buyout through cash and a smaller portion of unregistered company shares.

The transaction is expected to close by the end of March 2026, subject to customary closing conditions, with no assurance that a final deal will be completed.

Management Commentary

Highway Holdings Chairman, President, and CEO Roland Kohl said the acquisition aligns with the company's near- and long-term efforts to revive its OEM operations, noting that the business faces "an urgent need to replace customers whose revenue contribution has declined or halted" amid global disruptions surrounding COVID.

Kohl highlighted Regent-Feinbau's strong automotive pedigree, emphasizing that its capabilities as a Tier 1 supplier to brands such as AMG Mercedes-Benz will bring "a lot of value" to Highway Holdings' Chinese metal components unit, Nissin Shenzhen, as it targets opportunities in China's auto market.

He added that China remains one of the few automotive markets still delivering growth, estimating its current size at about $660 billion, with projected growth of more than 2% over the next five years.

Based on estimates that sheet metal accounts for roughly 8% to 12% of a vehicle's content, Kohl said the addressable sheet-metal component market represents approximately $50 billion annually, expanding at around 2%, or roughly $1 billion per year.

Synergies And Expansion Plans

Management stated that Regent-Feinbau's European business is expected to expand by leveraging Highway Holdings' expertise, enabling it to pursue higher-volume component opportunities that were previously out of reach due to limited resources.

The company highlighted these synergies as a key reason for its enthusiasm about the deal.

The acquisition is also described as the first step in a broader M&A strategy, with Highway Holdings currently reviewing additional potential targets in Germany identified over the past two years.

HIHO Price Action: Highway Holdings shares were up 14.46% at $0.95 during premarket trading on Tuesday, according to Benzinga Pro data.

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