Nikola Motor Corporate Two truck
Supply: Nikola Motor Corporate
Electrical heavy truck maker Nikola mentioned Monday that it struck a $144 million deal to procure battery pack provider Romeo Energy, giving the corporate keep an eye on over a key a part of its provide chain.
The all-stock transaction values Romeo at 74 cents according to proportion, a 34% top rate to Romeo’s last value Friday. Romeo’s stocks had been up about 23% to 68 cents in premarket buying and selling after the scoop used to be launched.
As a part of the deal, Nikola will supply Romeo with $35 million in meantime investment to proceed its operations till the transaction closes, the corporations mentioned. Nikola mentioned it believes the purchase may reserve it as much as $350 million over the following 4 years.
California-based Romeo makes a speciality of development battery modules and packs for massive electrical industrial automobiles, the use of lithium-ion battery cells manufactured by means of different corporations. Nikola, which started transport its electrical semi-trucks previous this 12 months and expects to send between 300 and 500 vans in 2022, has been Romeo’s greatest buyer.
Nikola CEO Mark Russell mentioned the deal will let the corporate boost up the advance of its electrification platform.
“Given our sturdy dating with Romeo and ongoing collaboration, we’re assured in our skill to effectively combine and ship the numerous anticipated strategic and monetary advantages of this acquisition,” he mentioned.
The deal is a lifeline for Romeo, which like Nikola is one of the corporations within the EV area to have long gone public by way of mergers with particular goal acquisition corporations. Romeo went public by way of a SPAC merger in overdue 2020, in a deal that valued the blended corporate at $900 million.
However Romeo had simply $66.8 million in money and equivalents ultimate as of the top of the primary quarter, after racking up greater than $250 million in losses. With its stocks buying and selling under $1 in contemporary weeks, and with rates of interest emerging, Romeo can have been operating out of choices to stick afloat.
Nikola has been running to win shareholder approval of a measure to extend its general choice of stocks exceptional, a measure that has been blocked by means of its former CEO, Trevor Milton, who used to be ousted following allegations that he misrepresented main points of Nikola’s era and order e-book to traders. Nikola plans to reconvene its shareholder assembly on Tuesday afternoon to announce the present vote totals.
In a regulatory submitting Monday morning, Nikola mentioned it has sufficient unissued inventory to finish the purchase of Romeo, even though the proposal to extend its stocks exceptional fails to cross.
