Westport acquires Alternative Fuel Vehicle Sweden AB, European natural gas system supplier to Volvo Cars
Westport Innovations Inc., a leader in natural gas engines, acquired Alternative Fuel Vehicle Sweden AB (AFV) of Gothenburg, Sweden for approximately SEK 51 million (approximately US$7.6 million). AFV is the sole supplier of natural gas fuel systems to Volvo Car Company (VCC).
Natural gas technology is playing an increasingly important role in European automotive markets, where there is a longstanding interest in cleaner, more economical transportation solutions. We have seen steadily growing demand in Sweden, particularly from corporate and fleet customers. As fueling infrastructure continues to expand and more automakers offer natural gas options, we expect to see that trend to continue across Europe.—Ian Scott, President of Westport Light Duty (LD)
Volvo dealers in Sweden have offered a bi-fuel 231-hp 2.5 liter turbocharged version of the V70 wagon, with the natural gas fuel system engineered and installed by AFV, since 2009. The Volvo V70 Bi-Fuel has been approved as a company car for Swedish businesses, and Swedish drivers can fuel up at more than one hundred public natural gas filling stations. In addition to emissions benefits, corporate and private customers are eligible for tax incentives that make natural gas an even more economical alternative. AFV now aims to expand into other European markets.
According to NGVA Europe, there are currently more than 1.4 million natural gas vehicles on European roads&madsh;most of them cars or other light duty vehicles—a more than three-fold increase over the past decade. Europe has more than 4,000 natural gas filling stations and demand for natural gas vehicles is expected to grow as tough new CO2 emission standards begin to take effect in 2012.
Founded in 2009 by a team of former Volvo employees, AFV builds and installs the natural gas systems at facilities located inside VCC’s main production center in Gothenburg. In addition to close ties to management at both VCC and heavy duty vehicle producer Volvo AB, AFV has had strong support from one of Sweden’s leading energy suppliers, Göteborg Energi.
Westport LD says that the acquisition creates strong synergies, providing a highly competitive new OEM for Europe as well as proven OEM-level validation and integration capabilities and a high performance system. AFV’s strength in Sweden complements Westport LD’s existing presence in Europe and Asia.
The purchase price consists of a closing amount of approximately SEK 21 million (approximately US$3.1 million), of which SEK 14.3 million (approximately US$2.1 million) is payable in cash and SEK 6.7 million (approximately US$1.0 million) in shares of Westport’s common stock with the number of shares calculated using a 20 day volume-weighted average price. Westport also assumes AFV’s existing debt of approximately SEK 8.2 million (approximately US$1.2 million) and repays a SEK 2.8 million (approximately US$0.4 million) shareholder loan to Göteborg Energi.
The total purchase price also includes earn-out payments of SEK 19.0 million (approximately US$2.8 million) payable in Westport shares and tied to revenue and production milestones to be achieved no later than 31 December 2014. AFV 2010 revenues were approximately SEK 42 million (approximately US$6.2 million) and is expected to add approximately US$1.5 million of revenue to Westport for the three months ended 31 December 2011.