Torotrak shares soar following licensing announcement

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.

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.

Advertisement - Article continues below

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.

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.

Advertisement - Article continues below

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.




Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

Industrial metals

Governments’ money-printing mania bodes well for base metals

Money is being printed like there is no tomorrow. Much of it will be used to pay for infrastructure projects – and that will be good for metals, says …
27 May 2020
Investment strategy

Are you a permabear? Three red flags to watch out for

Contrarian investors are often seen as bearish because the market tends to go up over time. But if that bearishness goes too deep, you risk seriously …
26 May 2020
EU Economy

Here’s why investors should care about the EU’s plan to tackle Covid-19

The EU's €750bn rescue package makes a break-up of the eurozone much less likely. John Stepek explains why the scheme is such a big deal, and what it …
28 May 2020