Ford and Daimler do a deal with Ballard

Ballard is to acquire the interests of DaimlerChrysler and Ford in Xcellsis and Ecostar Electric Drive Systems.

Ballard Power Systems, DaimlerChrysler and Ford Motor Company have signed an agreement in which Ballard will acquire the interests of DaimlerChrysler and Ford in Xcellsis and Ecostar Electric Drive Systems.

Xcellsis and Ecostar were formed as part of the vehicular fuel cell alliance between Ballard, DaimlerChrysler and Ford in 1998. Xcellsis develops, produces and sells proton exchange membrane (PEM) fuel cell engines for vehicular applications and integrates fuel cell engines and electric drive trains to form fuel cell power trains. For its part, Ecostar develops electric drive trains for use in electrically powered vehicles, and power conversion systems for microturbines, internal combustion engines and fuel cell products.

Ballard will issue an aggregate of 18,403,523 common shares to acquire the interests of DaimlerChrysler (9,405,271 shares) and Ford (8,998,252 shares) in Xcellsis and Ecostar.

Based upon the closing price on October 1, 2001, the Ballard shares to be issued are valued at $553-million (US $348-million).

The acquisition of DaimlerChrysler’s ownership interest in Xcellsis and the issuance of the related Ballard common shares will occur in two steps. Ballard will own the majority of the shares of Xcellsis on closing and will acquire the remainder from DaimlerChrysler by November 2004.

As a result of the issuance of Ballard common shares, DaimlerChrysler and Ford will increase their ownership in Ballard to 23.6 percent and 19.5 percent, respectively, from 18.0 percent and 13.5 percent currently.

Ballard, DaimlerChrysler and Ford will also enter into a new 20-year vehicular fuel cell alliance agreement, replacing the existing alliance agreement.

DaimlerChrysler and Ford will invest an additional $110-million (US $69-million) cash, $55-million through a private placement of Ballard common shares on the closing of the acquisitions and the remainder through participation in equity financings of Ballard within the next three years.