Weichai Power invests $163 million in Ballard Power, buys 19.9% stake

Weichai Power, the Chinese transportation equipment manufacturer, has reportedly entered into a strategic collaboration with Canadian fuel-cell company Ballard Power Systems. As per trusted sources, Weichai Power will be acquiring a 19.9% stake in Ballard for $163 million.

According to reports, the Chinese firm will also establish a joint venture in China with Ballard to support China’s booming FCEV (Fuel Cell Electric Vehicle) market. Following the deal Ballard will reportedly possess 49% stake in the newly formed JV while Weichai will hold a majority 51%.

Weichai’s majority stake will also reportedly grant it the right to nominate two directors to Ballard Power’s Board, expanding the current size of the board from seven to nine.

As per the press release of Ballard Power, the company’s current Chinese strategic partner – Zhongshan Broad-Ocean Motor Co., Ltd. will be investing an additional $20 million to retain its 9.9%  stake in the company.

Randy MacEwen, CEO of Ballard Power Systems Inc., has reportedly stated that the influx of $183 million will put Ballard in a very strong cash position which is especially relative to its peer group firms.

The deal reportedly impelled Ballard shares by more than 15% – causing share price to rise by about 69 cents with shares trading at $4.47 on the Toronto Stock Exchange.

As a part of the deal, Weichai will pay $90 million for exclusive rights to manufacture Ballard’s next-gen LCS fuel cell stack and LCS-based fuel-cell modules particularly for the Chinese commercial truck, bus and forklift markets.

Reportedly, Broad-Ocean has expressed an interest to acquire a 10% stake in the Chinese joint venture which would reportedly reduce Ballard Power’s stake.

All the foregoing transactions are expected to conclude by the fourth quarter of this year, subject to completion of regulatory approvals, definitive agreements and other customary closing conditions.