Fuel cell maker, Ballard Power Systems Inc. BLDP has inked an agreement with Protonex Technology Corporation to acquire the latter for a consideration of $30 million. Subject to Protonex Technology shareholders’ and other necessary approvals, the transaction is expected to be completed in the third quarter of 2015.
Ballard Power will assume Protonex Technology’s debt obligations worth $4.4 million. The remaining $25.6 million will be adjusted with the estimated issuance of 11.2 million Ballard shares. However, the number of Ballard shares to be issued is subject to adjustment and will depend on Protonex’s final debt obligations at closing.
Based in Southborough, MA, Protonex Technology is a private company that designs and manufactures advanced power management products and portable fuel cell solutions. The company currently has 85 issued and pending patents in proton exchange membrane (PEM) fuel cells and other technologies that can generate clean energy from widely available fuels such as propane, natural gas or diesel.
Expected Synergies
Ballard expects this deal to boost its Power Products and Technology Solutions portfolios for which the company has already implemented certain sales and marketing strategies. The transaction will provide diversification in terms of power management capabilities and exposure to military applications.
As for the growth part, Protonex Technology has witnessed a compound annual revenue growth rate of about 22% since 2011 and further projects top-line growth in 2015 and 2016. In the fiscal year ending Sep 30, 2014, Protonex generated revenues of $13.8 million with 40% gross margin and positive adjusted EBITDA. These encouraging numbers would give a boost to Ballard Power’s financials.
Recent Activities
Burnaby, Canada-based Ballard Power has lately received orders for various fuel cell modules to be applied in Chinese transport. The company also signed a contract to extend the operation of eight zero-emission hydrogen fuel cell buses in London for five more years.
The company had gained 19% from Jun 1 through Jun 12 on the back of these contracts. But as is the case with the fuel cell industry, which has been marked by volatile share price movements, Ballad Power shares gradually lost the gains. Share prices of fuel cell stocks are mostly on a roller coaster ride.
Zacks Rank
Ballard Power Systems currently has a Zacks Rank #4 (Sell). Better-ranked stocks in similar lines of businesses are LightPath Technologies, Inc. LPTH and Multi-Fineline Electronix, Inc. MFLX, both sporting a Zacks Rank #1 (Strong Buy) and TTM Technologies Inc. TTMI, carrying a Zacks Rank #2 (Buy).
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