DaimlerChrysler.gif” vspace=10 width=159>DaimlerChrysler and Ford are to increase their equity stakes in the fuel cell technology company, Ballard Power Systems. They will also consolidate related fuel cell and electric drive train research divisions into the Ballard operating unit. The moves and the alliance created are being hailed by the participants as an important step in bringing fuel cells to commercial markets.

Under the transaction, the transportation alliance formed by Ballard, Xcellsis and EcoStar will be consolidated to create an integrated fuel cell systems business. Ballard will acquire XCELLSIS, the fuel cell engine subsidiary of DaimlerChrysler, and Ecostar, the electric drive train and power conversion system subsidiary of Ford, in return for a total of Ballard common shares valued at US$ 348 million (CAD$ 553 million). DaimlerChrysler and Ford each will also purchase a total of US$ 34 million (CAD$ 55 million) in Ballard common shares for cash.


The transaction will take place in two steps – one at closing and the remainder prior to December 2004. At closing, the transaction will increase DaimlerChrysler and Ford equity ownership of Ballard to 23.6 percent and 19.5 percent respectively from the current 19.3 percent and 14.5 percent.


Ballard claims that the acquisition ‘enhances Ballard’s business beyond its world leadership in proton-exchange membrane (PEM) fuel cell components to include complete fuel cell systems for portable, stationary, and transportation markets. The acquisition also allows Ballard to become a world leader in power conversion systems for fuel cell, microturbine, internal combustion engine and renewable based power sources as well as a leader in electric drive systems.’


Ballard currently owns 26.7 percent of XCELLSIS and 20.9 percent of Ecostar, both of which are part of the Fuel Cell Alliance between Ballard, DaimlerChrysler, and Ford. DaimlerChrysler and Ford currently own 51.5 percent and 21.8 percent of XCELLSIS and 17.0 percent resp. 62.1 percent of Ecostar. XCELLSIS develops and commercialises PEM fuel cell systems for cars, buses and trucks and Ecostar develops and commercialise electric drive trains and power conversion systems for a variety of applications.







Corporate
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DaimlerChrysler





The transaction increases the commitment of DaimlerChrysler and Ford to the development of fuel cell powered vehicles and to Ballard as their supplier of fuel cell systems for motor vehicles, spokespersons for the three companies said. From DaimlerChrysler, Jurgen Hubbert, member of the board of management and responsible for Mercedes-Benz cars and Smart, Dr. Hans-Joachim Schopf, Senior Vice President, development of Mercedes-Benz cars and Smart, and James Donlon, Senior Vice President, Controlling Chrysler, will join the Ballard board of directors.


It is also claimed that the transaction means that Ballard will have the capability to supply automakers other than DaimlerChrysler and Ford with a full range of fuel cell powertrain components (other current customers include Honda, Nissan, Mazda and Volkswagen) and to supply products for market segments other than transportation.


Firoz Rasul, Ballard’s Chairman and Chief Executive Officer, said Ballard, DaimlerChrysler and Ford have been partners through shared ownership in XCELLSIS and Ecostar since 1998. “The benefits of integrating the three companies into one include organisational streamlining and rationalisation that will bring cost efficiencies, faster decision-making and accelerated product development cycles,” said Rasul.


“We will now proceed aggressively as one company with one vision, one management team and one goal to capture the increased value in the marketplace that comes from being a full systems provider,” said Rasul.


Jurgen Hubbert said: “DaimlerChrysler has invested approximately US$ 1 billion in fuel cell research and development and presented ten fuel cell vehicles either as concept cars or test vehicles, each one powered by Ballard® fuel cells. We will enthusiastically continue to pursue development of this revolutionary technology with the goal of being first to market. We will reach our aims in the alliance with Ballard and Ford.” The integration of the previously three companies into the ‘new’ Ballard enables us to continue our high speed of development.







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Ford





Wayne Booker, Vice-Chairman of Ford Motor Company commented, “The new fuel cell vehicular alliance structure is evidence of our confidence in Ballard’s ability to provide fuel cell power train solutions that are a compelling power source for many applications. Integrating electric drive train and power conversion systems, which are critical technologies for the success of fuel cell systems, into Ballard, is the most effective strategy to advance Ford’s fuel cell vehicle programs to deliver environmentally sound products to our customers.”


Rasul said that later this year Ballard will introduce its expanded product line by launching its first commercial application, a fuel cell-powered portable power generator jointly developed with Coleman Powermate Inc. Ballard also expects to launch its first transportation products for transit buses and power conversion systems products for microturbine and internal combustion engine based power generators in 2002, and its first — commercial stationary power generation products in 2003, followed by the commercial launch of its first automotive products in the period 2003 to 2005.


“The launch dates of our first commercial products are not affected by the integration. What will be very positively impacted is our ability to develop new products and rapidly introduce them to the marketplace. Over the coming years we plan to introduce a variety of products in each of our target markets,” said Rasul.


The boards of directors of DaimlerChrysler, Ford and Ballard have unanimously approved the transaction. To complete the transaction, Ballard will hold a Special Meeting of its shareholders on November 27 in Vancouver where shareholders will be asked to approve various related matters. The transaction is also subject to the approval of various regulatory agencies in Canada, the United States, and Germany.


The transaction is expected to close in November.














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