Source: Nikola Motor Company Electric heavy-duty truck maker Nikola said on Monday it had closed a $144 million deal to acquire battery pack supplier Romeo Power, giving the company control of a key part of its supply chain. The total transaction values Romeo at 74 cents per share, a 34% premium over Romeo’s closing price on Friday. Shares of Romeo rose about 23% to 68 cents in premarket trading after the news broke. As part of the deal, Nikola will provide Romeo with $35 million in interim financing to continue its operations until the transaction closes, the companies said. Nicola said he believes the acquisition could save up to $350 million over the next four years. California-based Romeo specializes in making battery modules and packs for large electric commercial vehicles, using lithium-ion battery cells made by other companies. Nikola, which began shipping its electric pickup trucks earlier this year and expects to ship between 300 and 500 trucks in 2022, was Romeo’s biggest customer. Nikola CEO Mark Russell said the deal would allow the company to accelerate the development of its electrification platform. “Given our strong relationship with Romeo and our ongoing partnership, we are confident in our ability to successfully integrate and deliver the many anticipated strategic and financial benefits of this acquisition,” he said. The deal is a lifeline for Romeo, which like Nikola is one of several electric vehicle companies that have gone public through mergers with special-purpose buyout companies. Romeo went public through a SPAC merger in late 2020, in a deal that valued the combined company at $900 million. But Romeo had just $66.8 million in cash and cash equivalents at the end of the first quarter after posting losses of more than $250 million. With its shares trading below $1 in recent weeks and interest rates rising, Romeo may have run out of options to stay afloat. Nikola is 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 chief executive, Trevor Milton, who was ousted after allegations he misrepresented company figures. technology and Nikola’s order book. investors. Nicolas plans to reconvene his shareholder meeting on Tuesday afternoon to announce the current vote totals. In a regulatory filing on Monday morning, Nikola said it has enough outstanding shares to complete the acquisition of Romeo even if the proposal to increase its outstanding shares does not pass.
