Fuel cell company acquired

Broomfield-based fuel cell maker Mesoscopic Devices LLC has agreed to be acquired for $12.4 million in cash and stock by Protonex Technology Corp.

Southborough, Mass.-based Protonex, which sells portable, low cost fuel cell systems to the U.S. military and commercial customers, expects the deal to enhance its technology portfolio, accelerate product development and open new markets.

Mesoscopic’s technical team will now focus mainly on its industry-leading solid oxide fuel cell (SOFC) technology, which uses solid-state materials to generate electricity directly from chemical reactions. SOFC fuel cells operate at higher temperatures than conventional membrane-based fuel cells and can use widely available propane, gasoline and diesel as fuel.

The acquisition, scheduled to close this weekend, is contingent upon Protonex raising additional funds from institutional and strategic investors in a secondary stock offering. The company is seeking to raise $15 million to $25 million by selling new shares. Following that, Mesoscopic’s owners are to receive $3.2 million in cash and the balance in new Protonex shares.

Protonex (PXT.L) raised $16.2 million last July with an initial public offering on the London Stock Exchange’s Alternative Investment Market. The Mesoscopic purchase is its first strategic investment since going public.

Protonex lost $5.7 million on revenue of $2.3 million during 2006. Privately held Mesoscopic Devices reported a profit of $100,000 and revenue of $3.2 million during 2006.

Earlier this month Protonex was awarded awarded a $3.5 million contract to develop a 250-watt portable fuel cell power source for the U.S. Army. The contract was the company’s largest to date, and brought the value of its total government contracts to more than $11 million.

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