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Ballard Signs Agreement for Sale of Methanol Telecom Backup Power Business For Up To $6.1M

Ballard Signs Agreement for Sale of Methanol Telecom Backup Power Business For Up To $6.1M


Ballard Power Systems recently announced that it has entered into a definitive agreement to sell certain of the Company’s methanol Telecom Backup Power business assets to Chung-Hsin Electric & Machinery Manufacturing Corporation , a major Taiwanese power equipment company, for a purchase price of up to $6.1 million.

Randy MacEwen, Ballard President and CEO said, “We are pleased to reach agreement on the sale of our methanol Telecom Backup Power business with CHEM, a long-time Ballard partner. We remain confident in the long-term potential for fuel cell systems to effectively serve the backup power needs of telecom operators around the globe. With the addition of these assets, we believe CHEM will be well positioned to become the leading provider of methanol backup power systems to the telecom industry. And, with a stack supply relationship with CHEM, Ballard will continue to enjoy exposure to this intriguing vertical.”

Mr. Eric Chiang, Chairman of CHEM added, “We see a significant market opportunity for methanol fuel cell backup power solutions in numerous geographic markets. The methanol fuel cell backup power business built by Ballard includes a strong product, customer list, sales pipeline and ecosystem. In combination with CHEM’s extensive telecom industry relationships and local Taiwan and China manufacturing capability, we will now be positioned to accelerate adoption in the telecom backup power market.”

The definitive agreement contemplates that CHEM will pay up to $6.1 million for certain assets in Ballard’s methanol Telecom Backup Power business, including an upfront payment of $3 million and an additional earnout of up to $3.1 million based on certain sales objectives during a pre-defined earnout period. In addition to the purchase price of up to $6.1 million, CHEM has agreed to purchase fuel cell stacks exclusively from Ballard over the earnout period, with a minimum spend of $2 million.

On closing of the transaction, which is expected during the current calendar quarter, CHEM will receive assets related to the methanol Telecom Backup Power line of business – including intellectual property rights and physical assets such as inventory and related product brands – and will also take on a number of Ballard engineering, sales and service employees involved in this business.Ballard previously announced that it was conducting a review of strategic alternatives for its methanol Telecom Backup Power business. In parallel to this review, during the first quarter of 2016 Ballard also implemented a cost reduction initiative related primarily to this business.CHEM has been involved in the Telecom Backup Power market since 2008 and has been a Ballard customer since 2012.

Anand Gupta Editor - EQ Int'l Media Network


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