Plug Power to Acquire H Power for $50.7 Million
Plug Power Inc. (Latham, NY) and H Power Corp. (Belleville, NJ) announced that they have entered into a definitive merger agreement pursuant to which Plug Power would acquire H Power in a stock-for-stock exchange valued at approximately $50.7 million. The two companies believe that the combination of the two leaders in the PEM fuel cell industry will create a stronger company that is better positioned to achieve long-term commercial and financial success in this new industry.
"We believe that this transaction will create a stronger and better capitalized company that will immediately benefit from greater financial strength, intellectual property and technical resources," said Roger Saillant, president and CEO of Plug Power, who will continue to serve in both capacities. "The combined entity will have 83 issued patents and 168 pending patent applications worldwide. By pooling the resources of H Power with Plug Power, we are better positioned to maintain a clear leadership position in the market for stationary PEM fuel cells."
Frank Gibbard, CEO of H Power, commented, "This combination should be very rewarding to H Power shareholders as it represents a substantial premium to recent stock prices. Over the past few months, our board has undertaken a comprehensive strategic review with the sole objective of enhancing shareholder value, and the board concluded that this transaction best achieves that objective. The combination of Plug Power and H Power provides our shareholders with an enhanced position to pursue what we believe to be attractive and substantial opportunities in the stationary fuel cell markets."
Under the terms of the agreement, the exchange ratio is set at eight-tenths of a share of Plug Power for each H Power share. H Power shareholders would receive Plug Power common shares equaling $4.70 per share for each H Power share. H Power shareholders will receive $50.7 million of value and will own between 13.3 and 15.8 percent of the Plug Power shares outstanding after the closing.
Plug Power plans to streamline the business and eliminate redundant operations, leading to an expected ongoing cash consumption rate of $40.0 to $45.0 million annually. It is anticipated that all operations will be consolidated into Plug Power's headquarters in Latham. Plug Power expects that it will have $90.0 million in cash at the closing date, which should be sufficient to fund operations into 2005. The transaction is expected to close no later than the first quarter of 2003.