Westport Enters EU Alternate-Fuel Sector

Purchases AFV Sweden, a natural-gas engine builder for light-duty automotive

Westport Innovations Inc. is paying an estimated $7.6 million to buy Alternative Fuel Vehicle Sweden AB (AFV), which supplies natural-gas fuel systems to Volvo Car Co. It said the purchase would create “strong synergies” for its Westport LD business unit, saying the AFV product line is complementary to its own.

The price consists of cash and some debt assumption by Westport, including repaying a loan issued by a current AFV shareholder.

Vancouver-based Westport Innovations Inc. develops alternative-fuel, low-emission engine technologies. Its Westport LD division concentrates on light-duty automotive systems, components, and engines, including 2.4-liter engines for light industrial service, e.g., forklifts, and oilfield service. Another Westport division serves the heavy-duty engine market, and the Cummins Westport joint venture supplies alternative-fuel engines for buses and trucks.

The buyer said its purchase creates “strong synergies” for Westport LD, with AFV's strength in Sweden complementing Westport LD's existing presence in Europe and Asia.

AFV builds natural-gas engines as a manufacturing enterprise within the main Volvo auto assembly plant at Gothenburg, Sweden. It builds natural-gas engines and installs them in Volvo cars. It was founded in 2009 by a team of former Volvo employees, and it has links to the management at both Volvo Car and Volvo AB, a heavy-duty vehicle builder.

The goal is to expand AFV’s market reach in Europe, where reportedly there are over 1.4 million natural-gas vehicles in use, mostly cars and light duty vehicles. Europe has more than 4,000 natural-gas filling stations and demand for natural-gas vehicles is seen growing as more restrictive CO2 emission standards go into effect in 2012.

In Sweden, Volvo has been offering a bi-fueled version of its V70 wagon since 2009, with a 231-hp 2.5-liter natural-gas engine built by AFV. That country already has more than 100 public filling stations offering natural-gas fuel. The nation also offers tax incentives to induce drivers to adopt the low-emission option.

"Natural-gas technology is playing an increasingly important role in European automotive markets, where there is a longstanding interest in cleaner, more economical transportation solutions," stated Westport Light Duty president Ian Scott. "We have seen steadily growing demand in Sweden, particularly from corporate and fleet customers. As fuelling infrastructure continues to expand and more automakers offer natural-gas options, we expect to see that trend to continue across Europe."

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