After consistently struggling for momentum over the past several years, Sigma Additive Solutions (NASDAQ:SASI) — a quality assurance software provider to the commercial 3D printing industry — finally brought welcome news to its shareholders. Today, the company announced the acquisition of NextTrip Holdings, a travel technology company. Subsequently, the early Friday morning announcement saw SASI stock pop up 170% before giving up some of the gains. At the time of writing, SASI stock is up 120% on the day.
According to the accompanying press release, Sigma will acquire 100% of the capital stock of NextTrip. A technology-driven platform, NextTrip delivers innovative solutions for business and leisure travel. Fundamentally, it enhances efficiencies throughout the travel industry value chain. Also, Sigma will divest its in-process quality assurance solutions to Divergent Technologies.
Below are other key details of the deal:
- In exchange for Sigma obtaining 100% of NextTrip’s capital stock, the latter entity will acquire almost 20% of outstanding shares of SASI stock. Additional shares will be contingent on NextTrip achieving certain business milestones.
- Following the acquisition, NextTrip CEO William Kerby will become CEO of the merged public company.
- Sigma will change its name to NextTrip. As well, it will trade under a new symbol on the Nasdaq. The transactions (the acquisition and divesture) should be completed in the fourth quarter of 2023.
Notably, the press release stated that “[t]he transaction was unanimously approved by the board of directors and will provide the opportunity for NextTrip to become a publicly traded company on Nasdaq.”
A Daring Move Brings Excitement to SASI Stock
Although such sharp transitions — moving from additive 3D printing to the travel industry — are risky, they can also be compelling. Essentially, a company focuses its expertise toward an arena that may be better suited for it. With SASI stock suffering a roughly 34% loss inclusive of Friday’s pop, something had to be done.
NextTrip President Lyndsey North stated in part the following:
“We continue to roll out key technology developments and are growing our footprint as an innovative travel technology company that specializes in using proprietary technology, analytics, and strategic partnerships to provide specialized travel solutions in leisure, wellness, and business travel.”
Per the press release, NextTrip features a legacy customer database of over 6 million. As well, it generated over $400 million in bookings in 2019. Presumably, if the revenge travel phenomenon continues to be robust, the framework should bolster SASI stock.
To be sure, dramatic business pivots are generally rare but not unheard of. Perhaps the most notable case involves telecommunications and information technology (IT) giant Nokia (NYSE:NOK). Per The Guardian, Nokia originally started out as a paper mill company.
Why It Matters
Within the past three months, no analyst covers SASI stock. However, about five months ago, H.C. Wainwright’s Scott Buck rated shares a buy with a $20 price target, implying nearly 251% upside.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
