Ballard Power denies rumor of Adani Power investment

A rumor popped up in The Times of India last week that fuel cell maker Ballard Power (Nasdaq:BLDP) of British Columbia, Canada, was looking to acquire a ten percent stake in Adani Power in a deal valued at approximately $500 million.

Adani Power, part of the $5 billion Adani Enterprises Group, is a supplier of conventional coal and thermal power, power transmission, and solar power plants. This seemed like a radical departure for Ballard, but clearly the whole fuel cell thing has not worked out as planned -- so maybe a strategic shift was in order.

The Indian paper checked the rumor with Ballard and got the standard "We don't respond to rumors" form letter in return. I inquired with both firms and today received from Ballard a flat-out denial that the two companies had ever spoken.

Which makes sense, because it seems a strategic mismatch and more importantly -- it's way out of Ballard's price range. Ballard's market capitalization is only $130.7 million.

In the time-honored tradition of the fuel cell industry, Ballard has not had a profitable quarter since its founding in 1987, and it has managed to lose almost a billion dollars since that time.

Ballard builds and sells -- at a loss -- proton exchange membrane (PEM) fuel cells. The firm has performed this philanthropic service in a variety of markets including automotive and stationary power, producing 120 megawatts of cumulatfve shipments since its founding. Ballard's customers include Toyota (TM), Wind Mobile, FirstEnergy (FE), Wal-Mart (WMT), BMW, Coca-Cola (KO), and FedEx (FDX). Revenues increased from $46.7 million in 2009 to $65 million last year, but Ballard has seen its bottom line shrink from a loss of $3.2 million in 2009 to an even larger loss of $34.9 million in 2010.

Source: Eric Wesoff, Seeking Alpha