Weichai Power Co., Ltd. and Ballard Power Systems have finalized their previously announced strategic collaboration transaction. The deal between the Canadian and Chinese was initially detailed in August 2018.
One of the key elements of the agreement calls for Weichai to build and supply at least 2000 fuel cell modules by 2021 for commercial vehicles using Ballard technology. Specific terms related to the scope of supply, product mix, pricing and timing of shipments are under discussion.
Other elements of the deal include a $163.6 million equity investment in Ballard by Weichai, an amount that represents a 19.9% stake in the company.
Also, Zhongshan Broad-Ocean Motor Co., Ltd. – a current Ballard strategic investor and Chinese partner, has invested an additional $20.2 million. As a result, the Weichai and Broad-Ocean equity investments in Ballard have generated total gross proceeds of approximately $183.8 million. The use of proceeds are expected to include investment in Ballard’s core fuel cell business, equity contributions to a joint venture company established by Weichai and Ballard to finance Ballard’s ownership position in the joint venture’s operations, and support of potential M&A transactions.
As Weichai holds at least 15% of Ballard’s outstanding shares, it will have the right to nominate two directors to Ballard’s board of directors, and Ballard will expand its board from the current seven directors to nine directors. Weichai has also agreed that, in the event of a third-party 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 and Ballard will establish a joint venture company in Shandong Province to support China’s fuel cell electric vehicle market, with Ballard holding an initial 49% ownership position. The JV will manufacture Ballard’s next-generation LCS fuel cell stack and LCS-based power modules for bus, commercial truck and forklift applications with exclusive rights in China and will pay Ballard $90 million under a program to transfer technology to the JV in order to enable these manufacturing activities. The JV will purchase Membrane Electrode Assemblies (MEAs) for LCS fuel cell stacks exclusively from Ballard under a long-term supply agreement. Ballard will also retain an exclusive right to the transferred technologies outside China.
Broad-Ocean has also expressed an interest in acquiring a 10% ownership position in the JV, which would correspondingly reduce Ballard’s ownership position from 49% to 39%. Discussions regarding this investment are currently underway between the parties.