Q: Seems like they are going to have trouble keeping up with demand. They are expanding to $900 million capacity, and then $1 billion by end of decade. If they want to grow faster and keep up with demand and capture market share, would they buy a competitor to gain more capacity faster, or?
What would you advise them to do strategically?
Could they be acquired by a larger company?
What would you advise them to do strategically?
Could they be acquired by a larger company?
5i Research Answer:
HPS.A could acquire a competitor - its current cash balance does not currently support this, but it could issue debt or shares for such acquisition. It could also invest in capacity expansion, which seems to be its current strategy, this would be a slower approach to increasing capacity than a straight acquisition. It could also form strategic partnerships through joint ventures or licensing agreements. We think an acquisition could make sense if there is a significant demand/supply mismatch, but the company has been performing excellently without an acquisition, and sometimes if the current strategy isn't broken, there's no need to fix it.
It could always be acquired by a larger company - it only trades at a $1.2B market cap today.