Ballard Gets Out Of Mobile Fuel Cells

Posted on November 9, 2007

Ballard Power Systems has spun off the automotive fuel cell operations that were once a Wall Street darling but are now viewed as an obstacle to profitability. The deal with major shareholders Daimler and Ford Motor Co will let Ballard concentrate on developing fuel cell technology for uses that are closer to commercial fruition and reduce cash drain, the company said.

CEO John Sheridan acknowledged the Vancouver-based company's public image was the fuel cell car, but said it had consumed resources better spent on other projects such as building fuel cells for forklifts or backup power generators. "This transaction and new structure frees us up to really concentrate on moving faster in commercial markets," Sheridan said in an interview. "Our focus on growth is going to be in non-automotive commercial markets."

Sheridan declined to say when Ballard expected to become profitable under the new strategy. He said management made a mistake several years ago by saying it would break even by 2007, without being able to meet that goal.

Under the deal announced late Wednesday, the automakers will return 34.3 million Ballard shares for cancellation. Ballard estimated the shares are worth $168 million, and it expects to record a gain of between $95 million to $105 million. Daimler, Ford and Ballard will create a new company to develop automobile fuel cells, with each making a $60 million investment. Daimler will have a 50.1% stake, with Ford holding 30% and Ballard 19.9%.

Ballard will be able to use the technology developed for automobiles for other applications. It will also continue to develop fuel cell-powered buses.

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