Ballard Power Systems Inc (USA) (NASDAQ: BLDP) is flying early on in the trading session this morning, and for good reason. The company entered into a strategic collaboration that will start with a large equity investment. Today, we’ll talk about:
- The collaboration;
- what we’re seeing from BLDP; and
- what we’ll be watching for ahead.
BLDP Soars On Collaboration
As mentioned above, Ballard Power Systems is having an incredibly strong start to the trading session in the pre-market hours this morning after news broke that the company has entered into a strategic collaboration. In a press release issued early this morning, the comapny announced that it has entered into the collaboration with Weichai Power.
BLDP said that the collaboration includes a substantial equity investment made by Wichai in the amount of approximately $163 million, representing a 19.9% interest in the company at a 15% premium. From there, the two companies will establish a joint venture to support China’s burgeoning Fuell Cell Electric Vehcile market. Also, the agreement includes a $90 million technology transfer program to the joint venture related to the company’s next-generation LCS fuell cell stack and power modules for bus, commercial truck and forklift applications. Finally Weichai has committed to build and supply at least 2,000 fuel cell modules for commercial vehicles in China.
Also, BLDP siad that Zhongshan Broad-Ocean Motor has agreed to invest approximately $20 million on top of its currently owned position at the same 15% premium. This will allow Zhongshan to maintain its 9.9% ownership position in the company. As a result, the total equity investment to $183 million. In a statement, Randy MacEwen, President and CEO at BLDP, had the following to offer:
Today marks an exciting and historic milestone on our roadmap to commercialize fuel cell vehicles, as we embark on a long-term collaboration with Weichai… Ballard is thrilled to partner with Weichai, the world’s largest manufacturer of diesel engines, with a corporate strategy to be China’s leader in zero-emission fuel cell powertrains and FCEVs. Weichai brings considerable expertise in the traditional motive power business, including engine design, application engineering and powertrain integration, along with extensive customer relationships, deep knowledge of the China market, substantial operations scale, supply chain muscle and a solid balance sheet. Weichai together with its parent company is also well positioned with its portfolio of acquisitions and investments in leading bus, truck and material handling OEMs. In addition, Broad-Ocean’s anticipated participation in this strategic collaboration, including its incremental investment in Ballard, is further validation of the exciting China market opportunities.
As strategic partners and shareholders, Weichai and Broad-Ocean are strongly aligned with the interests of Ballard’s shareholders. The new JV will offer a compelling framework through which our next-generation LCS fuel cell stack and power modules will be successfully integrated into buses, commercial trucks and forklifts for the China market. Weichai’s announced plan to deploy a minimum of 2,000 fuel cell commercial vehicles in China by 2021 is the largest commitment of commercial FCEVs to date globally. We believe this strategic collaboration will create an unparalleled ability to effectively address the Heavy and Medium Duty Motive markets in China with the most technologically advanced and competitively positioned fuel cell products, as we drive down costs and approach commercial scaling.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Ballard Power Systems, the news proved to be overwhelmingly positive. After all, the substantial equity investments will assist the company in operations and in its continued work surrounding fuel cell power. So, it comes as no surprise that excited investors are sending the stock screaming for the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:09), BLDP is trading at $3.56 per share after a gain of $0.62 per share or 21.09% thus far today.
Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on BLDP. In particular, we’re interested in following the story surrounding the company’s continued work in the fuel cell space following the announcement of the strategic investment. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
Never Miss The News Again
Do you want real-time, actionable news delivered to your inbox? Join the CNA Finance mailing list below!