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Nikola to take over Romeo Power in USD 144 million all-stock deal

Author : Pankaj Singh | Published Date : 2022-08-02 

Nikola to take over Romeo Power in USD 144 million all-stock deal

Electric heavy-duty truck maker Nikola has recently inked a deal worth $144 million to take over the battery technology company, Romeo Power, and gain control over a vital part of its supply chain.

As per market reports, this all-stock business deal values Romeo at 74 cents per share, a 34% premium to Romeo’s closing price last week. At the start of this week, the shares of Romeo closed at a 27% high, while those of Nikola’s closed at an 8% high.

Under this deal, Nikola will offer $35 million to Romeo in provisional funding for continuing its operations until the transaction finalizes. According to Nikola, this acquisition could help it save around $350 million in the coming four years.

Mark Russell, Nikola’s CEO, has stated that this deal would empower the firm to hasten the development of its electrification platform.

Considering its strong relationship with Romeo and the current collaboration, the firm is confident in its proficiency to successfully integrate and deliver the strategic and financial benefits expected from this acquisition, he added.

For the uninitiated, California-based Romeo focuses majorly on building battery packs and modules for large electric commercial vehicles with the help of lithium-ion battery cells manufactured by other companies.

Nikola, which started shipping its e-semi (electric semi) trucks this year and is anticipating the delivery of 300 to 500 trucks in 2022, is one of the largest customers of Romeo.

This deal is a life saver for Romeo, as one of many EV companies to have gone public through mergers with SPACs, like Nikola. In late 2020, Romeo went public via a $900 million SPAC merger.

Furthermore, in a regulatory filing, Nikola revealed that it holds sufficient unissued stock for successfully finalizing Romeo’s acquisition, even if its application to raise its outstanding shares does not pass.

Source Credit - https://www.cnbc.com/2022/08/01/nikola-nkla-to-acquire-romeo-power-rmo-.html

About Author

Pankaj Singh . .

Pankaj Singh

Endowed with a post graduate degree in management and finance, Pankaj Singh has been a part of the online content domain for quite a while. Having worked previously as a U.K. insurance underwriter for two years, he now writes articles for fractovia.org and other online portals. He can be contacted at- [email protected] | https://twitter.com/PankajSingh2605

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