Clean Energy Fuels Corp. has signed a purchase and sale agreement to acquire BAF Technologies, Inc., the leading provider of natural gas vehicle systems and conversions in the United States. The acquisition will close upon each party meeting certain closing conditions.
The purchase price payable at the closing of the acquisition of BAF is approximately $8.3 million. Pursuant to the terms of the acquisition agreement, the purchase price will be used in part to pay off the outstanding debt of BAF. Due to the fact that approximately $3.8 million of BAF’s outstanding debt is held by Clean Energy Finance, a wholly owned Clean Energy subsidiary, Clean Energy anticipates paying a net amount of approximately $4.5 million in cash to acquire BAF at the closing.
BAF shareholders will be able to earn a percentage of the future gross profit earned by the acquired company as additional consideration if BAF achieves certain gross profit targets in fiscal 2010 and 2011.
Domestic auto manufacturers have been remiss in not making NGVs available in the United States, even though the same companies produce numerous makes and models overseas where the NGV market is also growing. We believe that automakers will ultimately produce natural gas vehicles for the US market. When they do, BAF's technology may aid the automakers for future NGVs that are produced on a factory line. And today, BAF's after-market systems ensure that current NGVs are available for domestic light-duty fleets. We believe that the acquisition of BAF will support the needs of fleet customers today and will help us take advantage of the accelerating growth in the domestic NGV market in the future.—Andrew J. Littlefair, Clean Energy’s President and CEO
Following AT&T’s announcement in March of its intent to deploy more than 15,000 alternative-fuel vehicles over the next five years, approximately 8,000 of which are expected to be NGVs, BAF was awarded a purchase order to provide AT&T with the initial 600 Ford E-Series converted CNG vans. (Earlier post.)
Additionally, the recent action by the Texas legislature mandating the conversion of 13,500 fleet vehicles to alternative fuels with lowest fuel cost is another indicator of the potential increased demand for NGVs.