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Westport’s BAF Buy: a Deeper Dive

June 29, 2013 in CNG, Companies, NGVs by Rich Piellisch  |  No Comments

One Mission Accomplished, Clean Energy Looks to Core Business;
Westport Boosts Light Duty Upfit Business That’s Exclusively Its Own

Clean Energy Fuels purchased BAF Technologies in autumn 2009 to ensure that BAF could handle an historic CNG upfit job it had undertaken for AT&T. BAF has now converted more than 3,000 Ford vehicles for the telcom – out of more than 20,000 overall – and Clean Energy is turning its attention to its core business of providing natural gas fuel.

Westport Innovations, meanwhile, is perhaps best known for its Westport HD system for Class 8 trucks built around the 15-liter Cummins ISX, but shipped only three during the first quarter (by contrast, the Cummins Westport, Inc. joint venture for spark-ignition natural gas engines shipped 1,313 units during the quarter).

this is an update of an item posted when the acquisition news broke on Friday

BAF-converted Ford E-250 van for AT&T in San Francisco.

BAF-converted Ford E-250 van in San Francisco – one of more than 3,000 BAF-converted NGVs for AT&T

Moving to new markets outside CWI, Westport (Toronto:WPT and NASDAQ:WPRT) has added CNG-gasoline conversions of Ford pickups and last year established a ship-thru center for the bi-fuel trucks near Ford’s assembly plant in Louisville, Ky. During the first quarter, 204 Westport WiNG systems were shipped. That business will grow significantly now behind a single stroke: Westport has acquired BAF Technologies and its ServoTech Engineering subsidiary from Clean Energy for $25 million in Westport stock and a $5 million joint marketing and sales program (F&F, June 28).

“The amalgamation will create the largest product portfolio and largest market presence in the North American light duty natural gas vehicle space,” Westport says.

BAF-ServoTech had “trailing 12 months revenue of $20.9 million to April 30, 2013,” Westport says.

Westport Becomes Largest Ford QVM Partner

“Westport secures its position as Ford’s largest partner under the Qualified Vehicle Modifier (QVM) program with over 10 products and approximately 150 Ford authorized dealerships. The transaction allows both Westport and Clean Energy to focus on the significant growth opportunities as natural gas emerges as a global fuel for transportation.”

ServoTech also brings Ford QCM status, for Qualified Calibration Modifier: unique among natural gas vehicle QVMs (F&F, November 20).

Westport'€™s WKIC --€“ the Westport Kentucky Integration Center, integrated with the Ford assembly plant in Louisville, formally opened its doors on June 26, 2012.

Westport’€™s WKIC –€“ the Westport Kentucky Integration Center, integrated with the Ford assembly plant in Louisville, formally opened its doors on June 26, 2012.

Westport currently installs its Westport WiNG bi-fuel CNG-gasoline systems on Ford F-250 through F-550 series trucks at Louisville. The BAF buy adds transit, cargo shuttle and taxi vehicles, and dedicated NGVs. “BAF has been producing a broad list of natural gas vehicle conversions for more than a decade and recently produced its 20,000th compressed natural gas (CNG) vehicle conversion,” Westport says.

Westport will continue its work with the Westport WiNG upfits, and says that “the increased volume of orders expected through BAF will create economies of scale, and the BAF network will allow more flexibility in producing specialty configurations.”

ServoTech Brings ‘Preferential Access to Ford Engine Controls’

“We welcome the BAF and ServoTech,” Westport executive VP Ian Scott said in a release on Friday. “We believe the combination of this new teams’ market experience and Westport’s technologies, scalable manufacturing processes and quality control systems will help create the type of products needed to deliver an OEM-quality vehicle experience to our customers.”

ServoTech, Westport says, “offers a total engineering solution from initial concept phase to prototype hardware and final prove-out, including design and development of electronic products, software development, automotive exhaust simulation and testing, spark-ignition gasoline and diesel emissions technology, and offers technical training and education in a variety of subject areas.”

The Westport WiNG line will have lots of new company.

The Westport WiNG line will have lots of new company.

As a QCM, Westport says, ServoTech “has preferential access to Ford engine controls.” The unit also brings a diesel emissions control and diesel dual-fuel technology portfolio.

‘A Great Opportunity for Clean Energy to Sharpen Our Focus’

Westport says that the $25 million is payable in shares of Westport’s common stock on closing at a price of $30.62 based on a 10-day volume weighted average, subject to adjustments. Clean Energy (NASDAQ:CLNE) acquired BAF for approximately $8.3 million (F&F, October 5, 2009).

“This is a great opportunity for Clean Energy to sharpen our focus on fuel solutions as the market for NGVs quickly builds momentum,” Clean Energy president and CEO Andrew Littlefair says in the Westport acquisition announcement. “Westport will deliver great products, and we at Clean Energy will build the fuel infrastructure to fuel the vehicles.

“Our new marketing partnership expands our long-standing relationship and alliance as we worked together over the past decade,” Littlefair said.

Clean Energy Will Buy BAF-Westport Vehicles

Westport says it has committed $5 million to a new co-marketing program to boost the natural gas vehicle market. Westport will provide purchase incentives for fleets, including fuel credits, and has secured a commitment from Clean Energy to purchase Westport products.

The new marketing agreement includes

  • $5 million payable in March 2014 as payment for co-marketing activities by Clean Energy over the next two years;
  • a stipulation that Clean Energy will provide 750,000 GGEs (gasoline gallons equivalents) of CNG, to be used by Westport as marketing and “bundling” incentives. Fuel is useable anywhere in the Clean Energy network of CNG fueling stations until December 2015;
  • Clean Energy support for Westport product sales and marketing;
  • collaboration on specific customer situations, industry activities and joint policy positions; and
  • a Clean Energy commitment to fulfill at least 50% of its light and medium duty natural gas commercial vehicle needs from Westport and BAF during the term of the marketing agreement.

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Source: Westport Innovations with Fleets & Fuels follow-up



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