(ATF) South Korean conglomerate SK Group said it would take a 9.9% stake worth $1.5 billion in US hydrogen fuel cell maker Plug Power and form a joint venture to supply Asian markets, the companies said.
As part of deal, a US unit of SK Group will acquire about 51.4 million shares of Nasdaq-listed Plug Power at a price of $29.29 per share. Plug Power shares rose 20% in extended trading on Wednesday after closing 7.5% firmer.
The agreement comes at a time of brisk demand for clean energy, signalling a gradual shift from polluting fossil fuels in the coming years.
The South Korean government in 2019 announced the Hydrogen Economy Roadmap through 2040, with ambitious goals, including over 5 million tonnes of hydrogen per year, and expects the cumulative economic value of its hydrogen economy to reach about $40 billion by 2040.
“SK Group has an established strategy for building out the hydrogen economy in South Korea and beyond,” said Andy Marsh, Plug Power chief executive. “The current relationship with SK Group offers immediate strategic benefits to Plug Power to accelerate its expansion into Asian markets.”
Marsh said the agreement is intended to result in a formal joint venture by 2022. “Due to the complementary strengths in this partnership, we expect rapid growth and significant revenue generation from the joint venture that are incremental to our 2024 plan.”
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Plug Power makes hydrogen fuel cells to power electric motors. It claims to have sold more than 40,000 fuel cell systems and has become the world’s largest buyer of liquid hydrogen.
Its customers include US e-commerce giant Amazon, German vehicle maker BMW, global supermarket chains Carrefour and Walmart, plus US utility The Southern Company.
If a deal comes through, the SK Group-Plug Power investment is expected to close in the first quarter of 2021. Morgan Stanley served as the financial adviser and Goodwin Procter acted as legal adviser to Plug Power.
Hydrogen fuel cell companies are experiencing unprecedented growth, with the combined market capitalisation of the three largest suppliers rising 550% in 2020 to $20.8 billion, according to StockApps, a financial data compiler.
With reporting by Reuters
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