Nikola Buys Romeo Power for $144M
August 1, 2022
Nikola and Romeo Power have entered into a definitive agreement in which Nikola, a global leader in zero-emissions transportation and energy infrastructure solutions, will acquire Romeo, an energy technology leader delivering advanced electrification solutions for complex commercial vehicle applications, in an all-stock transaction. The proposed exchange ratio implies a consideration of $0.74 per Romeo share and represents an approximately 34% premium to Romeo's July 29, 2022 closing share price and values 100% of Romeo's equity at approximately $144 million.
Nikola's acquisition of Romeo Power is an important strategic move for
Nikola with minimal capital outlay that will bring Romeo’s deep battery
and BMS engineering capabilities in-house. It is expected to accelerate
Nikola’s product development, increase range and charge rates, and
improve customer experiences.
"Romeo has been a valued supplier to Nikola, and we are excited to
further leverage their technological capabilities as the landscape for
vehicle electrification grows more sophisticated. With control over the
essential battery pack technologies and manufacturing process, we
believe we will be able to accelerate the development of our
electrification platform and better serve our customers," said Mark
Russell, Nikola's Chief Executive Officer. "Given our strong
relationship with Romeo and ongoing collaboration, we are confident in
our ability to successfully integrate and deliver the many expected
strategic and financial benefits of this acquisition. We look forward to
creating a zero-emissions future together."
Integrated commercial vehicle electriﬁcation platform is expected to lead to manufacturing excellence and expected annual cost savings of up to $350 million by 2026; reduce non-cell related battery pack costs by 30-40% by the end of 2023
An important strategic move for Nikola with minimal capital outlay that will bring Romeo's deep battery and BMS engineering capabilities in-house; expected to accelerate Nikola's product development, increase range and charge rates, and improve customer experiences
Provides Nikola with domestic battery pack manufacturing capability, complementing Nikola's commitment to dual-source battery pack strategy to satisfy capacity needs
Romeo has proven battery pack technologies and a significant battery cell supply agreement in place
Nikola is Romeo's largest production customer, and the parties have strong ongoing engineering collaboration
The transaction has been approved by the Boards of
Directors of both companies. Under the terms of the agreement, Nikola
will commence an exchange offer to acquire all of the outstanding shares
of Romeo common stock. Under the terms of the agreement, Romeo
stockholders will receive 0.1186 of a share of Nikola common stock for
each Romeo share, representing an equity value of approximately $144
million and 4.5% pro forma ownership of Nikola. The transaction is
expected to be completed by the end of October 2022, subject to the
tender by Romeo's stockholders of shares representing a majority of the
outstanding Romeo common stock, and customary closing conditions,
including regulatory approval. Upon the successful completion of the
exchange offer, a newly-formed subsidiary of Nikola will be merged into
Romeo, and any remaining shares of Romeo common stock that were not
tendered in the exchange offer will be canceled and converted into the
right to receive the same consideration payable in the exchange offer.
Nikola has agreed to provide Romeo with $35 million in interim funding to facilitate continued operations through closing. Funding will consist of $15 million in senior secured notes and up to $20 million for a pack delivery incentive which is a temporary price increase for each pack delivered through expected transaction close. Additional liquidity support is available in the event the transaction closing is delayed.