Nikola Motor Firm Two truck
Supply: Nikola Motor Firm
Electrical heavy truck maker Nikola stated Monday that it struck a $144 million deal to accumulate battery pack supplier Romeo Power, giving the corporate management over a key a part of its provide chain.
The all-stock transaction values Romeo at 74 cents per share, a 34% premium to Romeo’s closing value on Friday. Romeo’s shares have been up about 23% to 68 cents in premarket buying and selling after the information was launched.
As a part of the deal, Nikola will present Romeo with $35 million in interim funding to proceed its operations till the deal closes, the businesses stated. Nikola stated it believes the acquisition may reserve it as much as $350 million over the following 4 years.
California-based Romeo focuses on constructing battery modules and packs for big electrical business autos, utilizing lithium-ion battery cells manufactured by different firms. Nikola, which started delivery its electrical semi vehicles earlier this yr and expects to ship between 300 and 500 trucks in 2022, has been Romeo’s largest buyer.
Nikola CEO Mark Russell stated the deal will let the corporate speed up the event of its electrification platform.
“Given our robust relationship with Romeo and ongoing collaboration, we’re assured in our means to efficiently combine and ship the numerous anticipated strategic and monetary advantages of this acquisition,” he stated.
The deal is a lifeline for Romeo, which like Nikola is certainly one of many firms within the EV house to have gone public through mergers with special-purpose acquisition firms. Romeo went public through a SPAC merger in late 2020, in a deal that valued the mixed firm at $900 million.
However Romeo had simply $66.8 million in money and equivalents remaining as of the tip of the primary quarter, after racking  up over $250 million in losses. With its shares buying and selling under $1 in current weeks, and with rates of interest rising, Romeo could have been operating out of choices to remain afloat.
Nikola has been working to win shareholder approval of a measure to increase its total number of shares outstanding, a measure that has been blocked by its former CEO Trevor Milton, who was ousted following allegations that he misrepresented particulars of Nikola’s know-how and order e book to buyers. Nikola plans to reconvene its shareholder assembly on Tuesday afternoon to announce the present vote totals.
In a regulatory submitting on Monday morning, Nikola stated it has sufficient unissued inventory to finish the acquisition of Romeo, even when the proposal to extend its shares excellent fails to move.
