Plug Power Inc., an electrical equipment manufacturing company, and SK Group, a conglomerate company, have recently announced plans to enter a strategic partnership. The deal is aimed at accelerating the use of hydrogen as an alternative source of energy in the Asian markets.

Under the partnership, the two companies are planning to deliver hydrogen fuel cell systems, electrolyzers, and hydrogen fueling stations to Korean as well as other markets in Asia. In addition, they also have inked a definitive agreement regarding an investment of $1.5 billion in Plug Power by SK Group, as well as to form a joint venture to aid the rapidly expanding Asian market.

The combination of the robust presence & leadership of SK Group in the Asian energy industry with the expertise of Plug Power in the green hydrogen generation, fueling stations, and hydrogen fuel cell systems will help accelerate the hydrogen economy in Asia.

The South Korean government, in January 2019, announced its Hydrogen Economy Roadmap through 2040 and set several targets such as the production of around 5-MM tons of hydrogen in a year, nearly 6-MM fuel cell EVs, 15-GW of the fuel cell power generation, and 1,200 refilling stations. Through these initiatives, the government is anticipated to register a cumulative economic value of over $40 billion of the hydrogen economy by 2040.

The upcoming deal represents the largest clean energy PIPE in the U.S. over the last 20 years. As per the terms of the agreement, SK Group’s U.S. subsidiary will make an investment of $1.5 billion in Plug Power to acquire nearly 51.4 million shares of the common stock at $29.2893 per share. This is also likely to represent over 9.9% pro forma ownership stake in the American equipment manufacturer.

The agreement is subject to several regulatory approvals and customary closing conditions. It is expected to be closed in the Q1 of 2021. Morgan Stanley & Co. LLC will serve as Plug Power’s financial advisor, while Goodwin Procter LLP will act as the legal advisor.

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