Shares of Ballard Power Systems Inc USA (NASDAQ:BLDP, TSX:BLD) rocketed Wednesday in premarket trade after the Canadian fuel cell company announced it secured around US$163mln from Weichai Power Co Ltd and established a joint venture in China.
The equity investment of approximately $163mln from Weichai, represents a 19.9% interest in Ballard and reflects a price based on a 15% premium to the 30-day volume weighted average price (VWAP). The substantial investment makes the Chinese automotive and equipment manufacturer Ballard's largest shareholder.
Separately, Zhongshan Broad-Ocean Motor Co. Ltd, a current Ballard investor and Chinese partner, has also agreed to invest a further US$20mln at the same 15% premium to maintain its 9.9% stake in Ballard. As a result, the Weichai and Broad-Ocean’s equity investment in Ballard now totals approximately US$183mln.
Ballard and Weichai established a joint venture to support China's growing fuel cell electric vehicle market. The deal includes a US$90mln technology transfer program to the joint venture related to Ballard's next-generation LCS fuel cell stack and power modules for bus, commercial truck and forklift applications in China.
As long as Weichai maintains at least a 15 per cent stake in Ballard it will have the right to nominate two directors to Ballard's board, which will expand to nine directors from seven.
The Chinese firm has also agreed that, if a third-party makes an offer to buy Ballard, Weichai will have the right to make a superior proposal or otherwise must vote its shares in accordance with the Ballard board recommendation.
Weichai is an automotive and equipment manufacturer specializing in powertrains, automobiles, intelligent logistics, automotive parts and components.
Shares of Ballard Power listed on Nasdaq shot up 20.4% to US$3.54 in premarket trade buoyed by the announcement.
Contact Uttara Choudhury at [email protected]