Ballard Power Systems (NASDAQ:BLDP; TSX:BLD) has closed a deal for a $28.3 million investment from Chinese manufacturer Zhongshan Broad-Ocean Motor.
Broad-Ocean, which makes a range of electric motors for the automotive industry, will have a 9.9% stake in the Burnaby-based fuel cell maker after the purchase of over 17 million shares at a price of roughly $1.62 per share.
The announcement comes after Ballard signed a distribution deal with Toyota Tsusho, the Japanese trading arm of Toyota.
The August 17 announcements drove Ballard higher on the Toronto Stock Exchange, to $2.53 per share as of the end of trading that day, and to a high of $2.95 per share on August 18. The company’s stock also jumped on Nasdaq, rising from $1.94 to a high of $2.32 per share.
The deal also included a two-year holding period for Broad-Ocean, during which the company is required to maintain ownership of the shares. The two companies also agreed on a framework detailing future activities the two firms would collaborate on. The two companies will work together on market and product development to create hydrogen fuel cell vehicles including cars, busses and commercial vehicles.
Ballard said it hopes that the agreement will help it to benefit from Broad-Ocean’s global operations and supply chain infrastructure. The goal is to lower the cost of Ballard’s fuel cell engines and the cost of integration with vehicles. The final collaboration agreement is expected to be signed at the end of 2016.
The agreement also provides Ballard with a right of first refusal to sell Broad-Ocean shares if Broad-Ocean wishes to increases its ownership to 20%.
In addition, Broad-Ocean agreed to a two-year stand-still under which it will not purchase more than 19.9% of Ballard’s outstanding stock without Ballard’s board’s approval.
