Pursuing Two Acquisitions with Clear Path to Executing on Green Hydrogen Strategy
LATHAM, N.Y. — Plug Power Inc. (NASDAQ: PLUG), a leading provider of hydrogen engines and fueling solutions enabling e-mobility, is pursuing transactions to acquire United Hydrogen Group Inc. and an electrolyzer technology platform company.
Both acquisitions are in line with Plug Power’s overall green hydrogen business strategy to have over 50% of hydrogen be green by 2024 and, if successfully completed, are expected to enhance Plug Power’s capabilities in hydrogen generation, liquefaction and logistics business.
Plug Power is in advanced negotiations to acquire United Hydrogen. Plug Power owns a convertible bond in United Hydrogen, which could represent over 30% equity ownership on a converted basis. United Hydrogen is the first independent company that brings a full suite of experience in production, distribution and logistics of liquid hydrogen, similar to industrial gas companies. If completed, the acquisition is expected to be accretive immediately and to have a meaningful positive impact on Plug Power’s cost of hydrogen, especially as the Company goes into 2021 and beyond.
Today, United Hydrogen produces 6.4 tons of hydrogen daily with plans to increase to 10 tons daily in the near future, and with goals of further expansion. This 6.4 tons of daily liquid hydrogen generation capacity has a low carbon footprint as it uses by-product hydrogen from chlor alkali plants. Plug Power’s hydrogen vertical integration strategy is designed to make hydrogen fuel ubiquitous while controlling fuel cost and turning this into a cash flow generating business.
“Plug Power will continue to work with its existing suppliers and also look to build more strategic partnerships as the Company’s demand for hydrogen is expected to increase substantially,”
said Andy Marsh, Plug Power CEO. “Plug Power projects its hydrogen demand to increase four-fold to over 85 tons of hydrogen a day by 2024 – up from over 27 tons per day today. In addition, the Company plans for over 50% of that to be green hydrogen.”
In line with this green hydrogen strategy, Plug Power is also pursuing the acquisition of an electrolyzer company. If the acquisition is completed, this technology platform is expected to provide Plug Power access to a range of electrolyzer products from 100kW to 1MW+. In addition, Plug Power’s manufacturing scale and experience is expected to allow for rapid scaleup of this product line. Plug Power has a growing pipeline of opportunities with its customers where the value proposition works well with electrolyzer technology today. In addition, this technology is expected to allow for Plug Power to expand its addressable market opportunity into other industrial applications. Leveraging electrolyzer and low-cost renewable power is key to a green hydrogen economy and is in line with our stated goal of having over 50% of hydrogen to be green by 2024. According to Bloomberg New Energy Finance, the cost of green hydrogen is expected to decline by over 50% by 2030.
Marsh continues, “We expect that both of these acquisitions would provide Plug Power with comprehensive skill sets in the entire hydrogen value chain and pave the way for going from low-carbon to zero-carbon hydrogen as we continue to focus on building the hydrogen economy.”
Plug Power has not yet entered into a definitive acquisition agreement with either acquisition target and both transactions are subject to the completion and execution of customary definitive documents and satisfaction of customary closing conditions. While Plug Power cannot guarantee that either acquisition will be completed, based on the current state of negotiations and transaction process, the company expects both acquisitions can be completed by the end of the second quarter of 2020.
About Plug Power
Plug Power is building the hydrogen economy as the leading provider of comprehensive hydrogen fuel cell turnkey solutions. The company’s innovative technology powers electric motors with hydrogen fuel cells amid an ongoing paradigm shift in the power, energy, and transportation industries to address climate change and energy security, while meeting sustainability goals.
Plug Power created the first commercially viable market for hydrogen fuel cell (HFC) technology. As a result, the company has deployed over 32,000 fuel cell systems for e-mobility, more than anyone else in the world, and has become the largest buyer of liquid hydrogen, having built and operated a hydrogen highway across North America. Plug Power delivers a significant value proposition to end-customers, including meaningful environmental benefits, efficiency gains, fast fueling, and lower operational costs.
Plug Power’s vertically-integrated GenKey solution ties together all critical elements to power, fuel, and provide service to customers such as Amazon, BMW, The Southern Company, Carrefour, and Walmart. The company is now leveraging its know-how, modular product architecture and foundational customers to rapidly expand into other key markets including zero-emission on-road vehicles, robotics, and data centers.