Ballard Power Systems' Mark 9 SSL fuel cell stack.

Ballard Power Systems is selling its automotive fuel cell assets to Daimler and Ford to focus on fuel cell applications for the materials handling, backup power and residential cogeneration markets.

Ballard will receive the 34.3 million Ballard shares, valued at about USD168 million, currently held by Daimler and Ford.

The transaction is expected to result in a USD95 to USD105 million accounting gain on the company's books. The gain is the difference between the value of the 34.3 million Ballard shares returned by Daimler and Ford and the value of assets transferred by Ballard.

Daimler and Ford will form a new private company, Automotive Fuel Cell Cooperation (AFCC), to develop fuel cell applications for the automotive sector, says Ballard Power Systems' corporate relations director Guy McAree, adding Ballard will have a 20% share in AFCC.

McAree says Ballard wants to have a share in AFCC as the company's activities are beneficial to the fuel cell developer.

"Ballard will obtain several benefits including the right to use transferred and future automotive fuel cell intellectual property developed at AFCC, Daimler and Ford, in non-automotive applications."

He says Ballard will be able to tap into profitable revenue by providing AFCC with contract technical services and manufacturing.

AFCC, which is expected to work closely with the R&D departments of Daimler and Ford, is owned by Daimler AG (50.1%), Ford Motor Company (30%) and Ballard Power Systems (19.9%). Ballard's USD60 million investment in AFCC is protected by a purchase/sale option agreement with Ford for USD65 million including interest.

AFCC will be staffed by 150 people and will be co-located with Ballard in Burnaby, British Columbia, Canada.

Andreas Truckenbrodt, the executive director of hybrid development at Daimler AG, will head AFCC. Truckenbrodt worked for Ballard from 2001 to 2002 and was responsible for fuel cell vehicles at Daimler from 2003 to 2004.

Ballard Power Systems shipped 551 fuel cell product units to the materials handling, backup power and residential cogeneration markets from January to September 2007.

New-York based fuel cell provider Plug Power has integrated Ballard fuel cells into its GenDrive fuel cell power units, which it has sold to end users including tyre and auto manufacturers, grocery and retail distributors and third-party logistics companies.

Following a successful beta trial of its GenDrive fuel cell power units at two Wal-Mart distribution centres in late 2006, Wal-Mart's distribution centre in Ohio has ordered the units to use in its forklifts. Other customers include Nissan and Bridgestone Firestone Tyre Company.