On Monday, July 13, both Ovonic Battery Company, Inc. and Chevron Technology Ventures LLC offloaded their equal stakes in the joint venture Cobasys L.L.C.Ovonic is a subsidiary of Michigan-based Energy Conversion Devices, Inc. (ENER) while Chevron Technology is a subsidiary of Chevron Corporation (CVX).
Cobasys develops and manufactures energy storage systems for hybrid electric vehicles.The stakes were bought by South Korea-based SB LiMotive Company Ltd. (SBL) – a $520 million joint venture between German car-parts maker, Robert Bosch GmbH and South Korean electronics player Samsung SDI Company Inc.Through the deal SB LiMotive expanded its product portfolio with nickel–metal hydride batteries.
The deal gets Energy Conversion Devices out of the unprofitable Cobasys JV.It can now focus on its core solar laminates business, which has been hit hard in recent times by falling demand for solar power on account of lack of project financing.Project financing for solar projects became scarce in light of ongoing recessionary trends.
The Cobasys sale also opened up a revenue stream for Energy Conversion Devices. Since Chevron and Ovonic Battery will continue to receive future royalties due to Cobasys by Panasonic till 2014, with Ovonic’s share being 20%.
Secondly, it puts an end to the long-standing legal tussle with Mercedes Benz U.S. International, Inc. (MBUSI) over supply of batteries for a luxury hybrid SUV being developed by MBUSI.To settle the lawsuit, OBC paid MBUSI $1.1 million from the $1.3 million it received from Cobasys royalty income.Cobasys had the royalty amount accumulated since January 2008 from Panasonic EV Energy Company Ltd.
Energy Conversion Devices is a leading global manufacturer of thin-film flexible solar laminate products for building integrated and commercial rooftop markets.We maintain our BUY recommendation on ENER.Our other strong BUY rated names in the solar space are Evergreen Solar (ESLR) and First Solar Inc. (FSLR).
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