Hexagon Composites — M&A Activity 2018

Oct 26, 2018

Hexagon acquires leading testing technology

Hexagon acquires leading testing technology

Hexagon Composites ASA (OSE:HEX) acquires the leading testing technology

company, Digital Wave Corporation. With this acquisition, Hexagon Composites

will fully integrate capabilities for testing and requalification of high-

pressure cylinders.

"Hexagon has worked successfully with Digital Wave for three years to apply

Modal Acoustic Emissions (MAE) technology to test Type 4 cylinders. With this

acquisition we take control of the unique testing process, which effectively

reduces the operators' down time, while ensuring an approved, safe and reliable

requalification method. We are further enhancing our leadership position by

obtaining the most advanced capabilities and technology currently available,"

said Jack Schimenti, Executive Vice President of Hexagon Composites Group. "We

believe that this technology has the potential of fulfilling the holy grail of

real-time health monitoring of composite cylinders."

Digital Wave, located in Denver, Colorado, is a leading provider of modal

acoustic emission (MAE) requalification and ultrasonic examination (UE) testing

of pressure vessels. MAE is a relatively new and unique process that uses sound

waves to measure structural integrity in composite structures. It greatly

improves both routine re-qualifications and post-accident inspections. Operators

of gas transportation modules in North America are required to requalify their

cylinders every five years. MAE testing collects data from cylinders under

pressure and provides a comprehensive evaluation of the composite structure of

each cylinder. UE is an efficient alternative to the traditional hydro-testing

of all-metal cylinders.

"Hexagon Composites is a leader in the composite pressure cylinder market and a

great strategic fit for Digital Wave's array of products and patents," adds Mike

Gorman, CEO of Digital Wave Corporation. "It provides a strong platform for the

Company's employees, who have developed testing technology for all types of

pressure vessels, to use their talents to expand both the range of applications

and global reach for Digital Wave's intellectual property. We are convinced that

both organizations complement each other in terms of products and services and

this will lead to a stronger position in the cylinder market."

"During the years we have worked together, we have been very pleased with the

partnership, and with the high level of knowledge and professionalism the team

possesses," said Jack Schimenti. "The Digital Wave technology is now reaching

maturity, and we expect strong profitable revenue growth in the years to come.

Digital Wave reported revenues of USD 3.8 (NOK 31.4) million in 2017, with an

adjusted EBITDA of USD 0.4 (NOK 3.0) million.

The agreed transaction value of Digital Wave is USD 7.5 million (approx. NOK

61.8 million). The signing of a definitive agreement has taken place on 26

October with expected closing in the fourth quarter of 2018. The business will

operate as a wholly owned subsidiary of Hexagon's US affiliate and will continue

to research and develop new products and services in this field.

For more information:

Jack Schimenti, Executive Vice President, Hexagon Composites ASA

Telephone: +1 402 470 5044 | jack.schimenti@hexagonlincoln.com

Hiva Ghiri, Vice President Investor Relations, Hexagon Composites ASA

Telephone: +47 958 66 790 | hiva.ghiri@hexagon.no

Solveig D Saether, Communication Manager, Hexagon Composites ASA

Telephone: +47 906 34 977 | solveig.saether@hexagon.no

About Digital Wave

Digital Wave Corporation is a privately held manufacturer of ultrasonic

examination (UE) cylinder testing equipment, modal acoustic emission (MAE)

testing equipment and a provider of associated inspection services. With

applications worldwide, Digital Wave and its partners serve government and

private clients in the compressed gas, pressure vessel and cylinder industries.

Applications include metallic and composite pressure vessels from low to ultra-

high pressure applications.

For more information, please visit www.digitalwavecorp.com

About Hexagon Composites ASA

Hexagon Composites delivers safe and innovative solutions for a cleaner energy

future. We are adapting our leading composite pressure vessel technology for a

wide range of mobility and storage applications.

For more information, please visit www.hexagon.no

Follow us on Twitter: @HexagonASA