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Ballard to collaborate with Weichai Power

Ballard fuel cells

Weichai will build and supply 2,000 fuel cells in China

Ballard Power Systems has entered into a strategic collaboration with Weichai Power Co.

Weichai will invest approximately US$163 million in Ballard and take a 19.9% interest in the company and the two will establish a joint venture to support China’s burgeoning fuel cell electric vehicle (FCEV) market.

A US$90-million technology transfer programme to the JV will also take place, related to Ballard’s next-generation LCS fuel cell stack and power modules for bus, commercial truck and forklift applications in China.

Weichai has also committed to build and supply at least 2,000 fuel cell modules for commercial vehicles in China.

In addition, Zhongshan Broad-Ocean Motor Co. – a current Ballard strategic investor and Chinese partner – has agreed to invest a further approximately US$20 million at the same 15% premium to maintain its 9.9% ownership position in Ballard. As a result, the Weichai and Broad-Ocean equity investments in Ballard will total approximately US$183 million.

All the foregoing transactions are expected to close in the fourth quarter of 2018, subject to completion of definitive agreements, regulatory approvals and other customary closing conditions.

Established in 2002 and with listings on the Hong Kong and Shenzhen stock exchanges, Weichai Power Co. is a leading automotive and equipment manufacturer specialising in the production of powertrains, automobiles, intelligent logistics, automotive parts and components.

Weichai’s investment will be subject to two-year “standstill” and resale restrictions (subject to customary exceptions). For so long as Weichai holds at least 15% of Ballard’s outstanding shares, it will have the right to nominate two directors to Ballard’s board of directors, and Ballard will expand its board from the current seven directors to nine directors after closing.

Weichai has also agreed that, in the event of a third-party offer to buy Ballard, Weichai will have the right to make a superior proposal or otherwise must vote its shares in accordance with the Ballard board recommendation.

Proceeds are planned to be used for investment in Ballard’s core fuel cell business and to support M&A transactions.

Weichai’s agreement to supply a minimum of 2,000 fuel cell modules is the largest announced planned commercial fuel cell vehicle deployment in history globally. Specific terms related to the supply of fuel cell power modules for commercial vehicles, including scope, product mix, pricing and timing of shipments, are under discussion between Weichai and Ballard.

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