Transport engineering company Torotrak has concluded negotiations with Allison Transmission under which Allison will pay six million pounds for continued exclusivity to manufacture and sell Torotrak main drive transmissions in commercial vehicle market segments.
Torotrak reported that the exclusivity excluded Torotrak's other commercial vehicle licensees; Tata Motors and the European Truck and Bus Manufacturer.
It said that Allison has also subscribed for an additional 8.2m new ordinary shares in Torotrak at a price of 30.255p per share, representing a 20% premium to the average mid-market closing price of a Torotrak share for the 10 business days prior to today, raising approximately £2.5m.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Separately, and in line with Torotrak's strategy to take greater control of routes to market and broaden its technology base, the company announced that it had invested £3.0m to acquire a 20% stake in Flybrid Automotive, together with an exclusive option to acquire the remaining 80% by December 20th 2013.
The company's core product is a high-speed flywheel based Kinetic Energy Recovery System (KERS) and it said that Flybrid would be able to offer customers a full service including design, manufacture, assembly, development and support of its KERS device.
Jeremy Deering, Chief Executive Officer of Torotrak, said: "The announcement of the Allison agreement, and our investment in Flybrid, represent collectively an important milestone and I believe a true turning point for the company. The strategy we set out to achieve in November of a more diversified company with greater control of its routes to market, has taken a good step forward today.
He added: "We are determined to get mechanical hybrid technology to market and with Flybrid we are setting up the supply and manufacturing arrangements to achieve that."
Lawrence Dewey, Chairman, President and Chief Executive Officer of Allison Transmission, said: "Allison is committed to introducing fuel efficient, emissions reducing technologies and our licensing decision today with Torotrak reflects our determination to be a global leader in this field.
"A purely mechanical energy recovery system is in many ways an engineer's dream, but with the anticipated technology advancement and closer working relationship between Torotrak and Flybrid, we see the investment as having all the potential ingredients to make this a reality."
Jon Hilton, Managing Director of Flybrid Automotive, said: "This is a key announcement in the development of the Flybrid business. In Torotrak we have found a technology-focused investor with in-depth understanding of our market space and a number of areas of common aspiration."
Torotrak's share price was up 16.67% to 28p at 10:21 on Monday.
MF
-
Inheritance tax reforms: government urged to rethink curbs on rural reliefsMPs want the government to delay changes to inheritance rax reliefs for farmers
-
‘I’m among the thousands of millionaires leaving the UK – the new tax rules don’t make sense ’MoneyWeek spoke to a serial entrepreneur who is leaving the UK following the abolition of the non-dom tax status
