Ballard Power Systems has entered into a definitive agreement to divest assets of its subsidiary Protonex to private US-based company Revision Military to “focus on core fuel cell market opportunities”.

The deal, valued at up to $16m, will see Ballard divest certain non-core assets related to the Power Manager business. The fuel cell specialist will retain certain assets related to fuel cell propulsion systems for military and commercial unmanned vehicles.

Terms of the transaction include upfront consideration of $4.75m to Ballard – payable in cash and note – subject to a customary working capital adjustment, and up to a further $11.25m, based on achievement of specific sales objectives during a 12-month earn-out period.

The transaction is expected to close within the next 60 days, subject to customary closing conditions.

Randy MacEwen, Ballard President and CEO said, “This divestiture is consistent with our strategy of continuous portfolio optimisation. We decided to divest Protonex assets that are no longer aligned with Ballard’s strategic fuel cell focus, while retaining assets related to the unmanned vehicle market, under the Ballard brand. The divestiture reduces complexity while adding fuel for us to invest in our core fuel cell business.”

“We originally acquired Protonex to provide strategic diversification and to engage the US military complex as a potential customer for portable fuel cell products. With the developing value proposition and attractive market opportunities for fuel cell electric vehicles or FCEVs in Heavy- and Medium-Duty Motive markets, including bus, truck, rail, marine and other applications, we are divesting the Power Manager business to focus on core fuel cell market opportunities. The Power Manager business is a good long-term business that better complements the Revision strategy.”

Jonathan Blanshay, CEO of Revision Military commented, “Revision is in the business of developing and supplying leading-edge protective equipment, along with innovations in power management and integrated systems, for mission critical military and tactical use.”

“We are confident that our corporate platform, along with planned increases in US defence spending and achievement of Milestone C, create a compelling growth opportunity for the Protonex Power Manager business.”

In 2015 Ballard paid approximately $17.5m in shares and cash to acquire Protonex, which included the Power Manager business, a Solid Oxide Fuel Cells business which was divested in January 2018, and the unmanned vehicle business.