Nikola NKLA to acquire Romeo Power RMO

Nikola Motor Organization Two truck

Source: Nikola Motor Company

Electric powered hefty truck maker Nikola mentioned Monday that it struck a $144 million offer to receive battery pack supplier Romeo Energy, giving the firm handle about a important section of its offer chain.

The all-inventory transaction values Romeo at 74 cents per share, a 34% high quality to Romeo’s closing price Friday. Romeo’s shares closed up about 27% on Monday Nikola’s closed up approximately 8%.

As section of the deal, Nikola will deliver Romeo with $35 million in interim funding to continue on its functions right until the transaction closes, the companies explained. Nikola reported it believes the acquisition could conserve it up to $350 million more than the following four several years.

California-based Romeo specializes in creating battery modules and packs for massive electrical industrial autos, applying lithium-ion battery cells created by other companies. Nikola, which began transport its electrical semi-trucks previously this yr and expects to ship amongst 300 and 500 vans in 2022, has been Romeo’s most significant purchaser.

Nikola CEO Mark Russell reported the offer will permit the organization speed up the development of its electrification platform.

“Supplied our robust partnership with Romeo and ongoing collaboration, we are confident in our ability to effectively integrate and produce the several predicted strategic and economic added benefits of this acquisition,” he explained.

The deal is a lifeline for Romeo, which like Nikola is a single of numerous companies in the EV house to have long gone general public by using mergers with exclusive intent acquisition firms. Romeo went general public via a SPAC merger in late 2020, in a deal that valued the merged firm at $900 million.

But Romeo had just $66.8 million in funds and equivalents remaining as of the finish of the 1st quarter, immediately after racking up far more than $250 million in losses. With its shares trading underneath $1 in recent months, and with curiosity premiums rising, Romeo may perhaps have been jogging out of solutions to stay afloat.

Nikola has been working to gain shareholder acceptance of a measure to boost its whole variety of shares fantastic, a evaluate that has been blocked by its previous CEO, Trevor Milton, who was ousted pursuing allegations that he misrepresented specifics of Nikola’s technology and order e-book to traders. Nikola programs to reconvene its shareholder conference on Tuesday afternoon to announce the existing vote totals.

In a regulatory filing Monday morning, Nikola said it has plenty of unissued stock to entire the acquisition of Romeo, even if the proposal to increase its shares superb fails to pass.