Canadian Fuel-cell maker Ballard Power Systems Inc. said Tuesday it will buy DaimlerChrysler AG and Ford Motor Co.'s stakes in fuel-cell engine makers Xcellsis GmbH and Ecostar Electric Drive Systems LLC., in an all-stock deal worth $553-million.
Ballard said it will issue more than 18 million common shares to fund the purchase. The transaction will lift DaimlerChrysler and Ford's stakes in Ballard to 23.6 per cent and 19.5 per cent, respectively, from 18 per cent and 13.5 per cent.
Xcellsis and Ecostar were formed as part of an alliance between Ballard, DaimlerChrysler and Ford in 1998.
Xcellsis is focused on building fuel cell engines for buses, cars and trucks while Echostar focuses on drive trains for electric-powered vehicles.
The new deal means Ballard will be the exclusive provider of fuel cells to the automakers.
"Consolidating Xcellsis and Ecostar into Ballard will make Ballard a stronger company with expanded markets, more products, greater capabilities, an unrivaled technology portfolio and a formidable team, extending Ballard's lead in the fuel cell industry," Firoz Rasul, Ballard's chairman and chief executive officer, said in a statement.
"This transaction will result in the increased commitment of DaimlerChrysler and Ford to Ballard's success. Ballard's expanded product range and enhanced ability to provide complete solutions will bring us much closer to all our customers."
Fuel cells, which generate electricity by combining oxygen and hydrogen, are widely seen as an environmentally friendly alternative to the internal combustion engine in cars and buses. In contrast to combustion, fuel cells can achieve zero greenhouse-gas emissions.
Companies such as GM and Ballard also are developing fuel cells for use in stationary power plants and even for use in the home.
"To date, DaimlerChrysler has invested approximately $1-billion [U.S.]in fuel cell research and development and presented ten fuel cell vehicles as either concept cars or test vehicles, each one powered by Ballard fuel cells," DaimlerChrysler's Jurgen Hubbert said.
"The new vehicular fuel cell alliance structure will further enhance the rapid technology development demonstrated to date. DaimlerChrysler will enthusiastically continue to pursue development of this revolutionary fuel cell technology with the goal of being first to market," he added.
Ford's vice-chairman Wayne Booker echoed those comments saying his company is commited to fuel-cell development as it is "an important part" of its long-term environmental strategy.
Ballard said it remains on-schedule to launch some of its fuel-cell powered generators later this year. Next year, it will release transit bus engines. It said it plans to bring its automotive products to the market as early as 2003.
Shares of Ballard, traded on the Toronto Stock Exchange, surged more than 19 per cent Tuesday as investors reacted to the news.
At 2:31 p.m. EDT, they were up $4.70 to $34.75, retreating from an intraday high of $35.95. Over the past year, Ballard's share have been as low as $22 and as high as $171.25.
Separately, Ballard also said that its president and chief operating officer, Kip Smith, will resign for personal reasons and to pursue other business opportunities.
Monday, Ballard said it plans to acquire Ebara Corp.'s interest in Ballard Generation Systems, Ballard's stationary power products subsidiary. The company will purchase Ebara's interest in BGS for $35.8-million (U.S.) in shares.