ITM Power inks heads of terms for sale of Motive Fuels stake

14th Aug 2023 08:59

(Sharecast News) - Hydrogen energy technology specialist ITM Power announced a significant step in its strategic restructuring on Monday, by entering into a non-binding heads of terms agreement for the sale of Motive Fuels.

The AIM-traded firm said the move aligned with its commitment to enhance cost and capital discipline, while focusing on its core business of manufacturing advanced electrolysers.

It first announced its decision to review strategic options for Motive Fuels when it released its interim results in January.

The joint venture, established in March 2022, was aimed to spearhead the development and proliferation of hydrogen refuelling stations across the UK.

The collaboration was characterised by a shared investment of £30m from each partner as seed funding, reflecting a concerted effort to build a robust hydrogen refuelling business within the UK market.

However, ITM Power said its evolving strategic priorities had led to a reshaping of its business focus.

One of the central components of the company's 12-month plan was the reinforcement of cost-efficiency and capital management.

To that end, the transaction would enable ITM to reallocate £28m of pre-committed funds to its core activities.

It said the redirection of resources would empower it to concentrate on its core competence, being the mass production of state-of-the-art electrolysers, essential components in the process of producing hydrogen through electrolysis.

The sale of Motive Fuels was expected to be finalised within the current calendar year.

By divesting from the hydrogen refuelling station business, ITM Power said it would be primed to enhance its capabilities in electrolysis technology and contribute further to the development of the burgeoning hydrogen economy.

"The sale of Motive will allow us to devote our time, attention and capital resources on our core competencies, to ready the business for scaling up to capture the significant growth opportunities that lie ahead of us," said chief financial officer Andy Allen.

"Motive has been an important part of ITM's journey, and it is important to us that the business will be left in capable and ambitious hands."

At 0840 BST, shares in ITM Power were down 0.19% at 96.5p.

Reporting by Josh White for Sharecast.com.