Shares of Ballard Power Systems Inc USA (NASDAQ:BLDP, TSX:BLD) climbed Tuesday in premarket trade after the Canadian fuel cell company signed a pact with a private company called Revision Military Ltd, to sell non-core assets of its subsidiary, Protonex, related to its power business.
Ballard will receive US$16mln in cash as part of the sale. However, it will still retain certain assets related to fuel cell propulsion systems for military and commercial unmanned vehicles.
Shares of Ballard Power listed on Nasdaq shot up 5.9% to US$3.75 before the opening bell.
"This divestiture is consistent with our strategy of continuous portfolio optimization,” said Ballard CEO Randy MacEwen. “We decided to divest Protonex assets that are no longer aligned with Ballard's strategic fuel cell focus, while retaining assets related to the unmanned vehicle market, under the Ballard brand. The divestiture reduces complexity while adding fuel for us to invest in our core fuel cell business."
READ: China’s Weichai Power pours US$163mln in Canada’s Ballard Power for a majority stake in the company
In 2015, Ballard paid roughly US$17.5mln in shares and cash to acquire Protonex, which included the power manager business, a solid oxide fuel cells business and the unmanned vehicle business.
The CEO said Ballard had originally acquired Protonex to provide “strategic diversification” and “to engage the US military complex” as a potential customer for portable fuel cell products.
“With the developing value proposition and attractive market opportunities for fuel cell electric vehicles or FCEVs in Heavy and Medium Duty Motive markets, including bus, truck, rail, marine and other applications, we are divesting the power manager business to focus on core fuel cell market opportunities,” said MacEwen.
Ballard was in the news last week after it secured around US$163mln from Weichai Power Co Ltd and established a joint venture in China. 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 a Chinese partner, also agreed to invest a further US$20mln at a 15% premium to maintain its 9.9% stake in Ballard. As a result, the Weichai and Broad-Ocean equity investment in Ballard now totals approximately US$183mln.
Contact Uttara Choudhury at [email protected]