Protonex Technology Corporation (LSE: PTX), a manufacturer of high-performance proton exchange membrane (PEM) fuel cell power systems, has entered into an agreement to acquire Mesoscopic Devices, a leader in solid oxide fuel cell (SOFC) technology, fuel reforming, and desulfurization systems.
Protonex will pay $12.4 million – $3.2 million in cash and the balance in new common shares in Protonex. Mesoscopic Devices, based in Broomfield, Colorado, is a leading provider of ten to 1,000-watt fuel cell power solutions and has developed two platforms of fully integrated power systems based on SOFC and direct methanol fuel cell (DMFC) technologies, including one of the first portable SOFCs operating on liquid fuels.
Established in 1998, the company’s principal business is development of portable fuel cell technology for government, military and commercial customers including the US Army, US Navy, DARPA and NASA. The company has received over $13 million in cumulative contracts. The unaudited accounts of Mesoscopic Devices for the year ended December 31, 2006, show revenue of $3.2m, net income of $0.1m, and net assets at December 31, 2006, of $0.7m.
The acquisition represents Protonex’ first strategic investment since its admission to the Alternative Investment Market of the London Stock Exchange (“AIM”) in July 2006.
Scott Pearson, Protonex CEO, stated, “The combination of Protonex and Mesoscopic Devices will allow us to build on the clear technical and market synergies that exist between the two businesses and considerably strengthen our position as a leader in the portable fuel cell industry. We are very impressed with Mesoscopic Devices’ technical capabilities and expect operations on both sides to move forward quickly, resulting in a greater opportunity to capture increased market share with our expanded product offerings. With this acquisition, we believe that Protonex will be the only portable power company in the world with the ability to offer our customers the benefits of both PEM and SOFC technologies.”
Post acquisition, Protonex will focus the Mesoscopic Devices team primarily on the development of several SOFC-based product platforms. The first SOFC platform fueled by propane gas is currently at the functional prototype stage. Additional SOFC platforms fueled by gasoline, diesel and JP8 are in advanced development today and will be accelerated with additional resources from Protonex. Activities at Mesoscopic Devices outside of these efforts will be limited and the result will be a modest near-term reduction in contract revenues from 2006 levels and an increase in cash burn resulting from a more aggressive investment in product development.
To date, Protonex has secured contracts with more than $12 million in total program value with US government agencies, including its largest to date announced earlier this month, a $3.5 million contract to develop a 250-watt portable fuel cell power source for the US Army. The Company is also pressing forward on the commercial front and will be introducing a new 250-watt methanol-fueled PEM fuel cell power system at the Hannover Fair on April 16, 2007, in Hannover, Germany.
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