Fuel cell developer Ballard Power Systems reportedly has agreed to restructure its partnership with DaimlerChrysler and Ford, selling back a unit it purchased in 2001.
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According to Reuters, Ballard said the deal with the auto giants for Ballard AG, which was known as XCELLSIS in 2001, will allow it to focus on the development of fuel cell stacks, rather than on related engine technology.
DaimlerChrysler and Ford will also provide Ballard with up to $US58 million to develop the next two generations of vehicle fuel cells and the next generation of electric drive systems, the Vancouver-based company reportedly said.
Ballard said it expected to record an estimated loss of $18 million the third quarter because of the transaction. The deal, expected to be finalised by the end of the year, will reduce cash burn, the company said, according to the report.
Ballard reportedly said that owning Ballard AG had allowed it to resolve technology issues on how the stacks of cells, which produce electricity from hydrogen, work with related engine systems such as electronics.
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By GlobalDataBut chief executive Dennis Campbell acknowledged that demand for the system technology was less than expected because car firms want to develop it themselves, in part to use it in hybrid gasoline/electric vehicles, Reuters said.
“What we’ve learned is that the broad market is going to be more interested (in buying) stack only. We found limited receptivity to a complete system,” Campbell reportedly told analysts.
Reuters said the deal will see Ford buy a 50% stake in the German-based Ballard AG unit by returning nine million Ballard shares worth $80.4 million held by the two automakers. The shares will then be cancelled.
Ballard reportedly will also cancel 7.6 million shares it was set to sell DaimlerChrysler in November as part of the two-stage deal in which it bought XCELLSIS in 2001.
Ballard said its total number of outstanding shares will drop by 4% when the transaction is complete, Reuters said – Ford’s and DaimlerChrysler’s combined stake will drop from about 35% to 32.7%.
Ballard will continue to own the Ecostar unit that also purchased from the auto firms in 2001, and which makes electric drive equipment, the report added.
National Bank Financial analyst MacMurray Whale reportedly felt the deal would reduce Ballard’s future revenues, but it was difficult to calculate by how much because it had never been clear how big the market was for Ballard AG’s systems.
Whale also questioned Ballard’s claim of success in using Ballard AG to develop needed technology, since that knowledge was now being passed at a loss to Ford and DaimlerChrysler, Reuters said.
Another analyst reportedly said the deal appeared positive but strategically muddy.
“While the termination of the obligation and the investment(s) is positive, the strategic purpose and/or benefit of these transactions is unclear,” Brian Piccioni, an analyst with BMO Nesbitt Burns wrote in a research note cited by Reuters.
