The Lordstown Motors Corp. Endurance electrical pickup truck is displayed throughout an unveiling occasion in Lordstown, Ohio, U.S., on Thursday, J
The Lordstown Motors Corp. Endurance electrical pickup truck is displayed throughout an unveiling occasion in Lordstown, Ohio, U.S., on Thursday, June 25, 2020.
Matthew Hatcher | Bloomberg | Getty Photos
Shares of DiamondPeak Holdings, a particular objective acquisition firm, jumped greater than 20% throughout premarket buying and selling on Monday after the corporate introduced that it’s going to merge with electrical automobile firm Lordstown Motors. The mixed firm will commerce on the Nasdaq beneath the brand new image “RIDE.”
The deal represents two areas of explicit investor curiosity this yr: particular objective acquisition firms (SPACs), in addition to electrical automobile start-ups.
SPACs are often known as blank-check firms, since traders fork over cash with out realizing when, and even what for, their capital can be used. As soon as the SPAC goes public, the objective is then for it to amass or merge with a non-public firm, thereby taking it public.
Amid market uncertainty and a lackluster IPO market, SPACs are on tempo to lift a file quantity of capital this yr, in accordance with information from Dealogic.
The merger between DiamondPeak and Lordstown Motors, which is anticipated to shut within the fourth quarter of 2020, represents not less than the third deal between a SPAC and an electrical automobile start-up this yr.
In June Nikola Company started buying and selling after a reverse merger with VectoIQ, and in July electrical automobile start-up Fisker stated it could merge with Spartan Vitality Acquisition, a particular objective acquisition firm backed by Apollo International Administration. Investor enthusiasm for the EV area comes amid a greater than 240% leap in shares of Tesla this yr.
However whereas traders initially piled into Nikola — sending shares up 150% within the first 4 days of buying and selling — a few of that enthusiasm has since cooled, and on Friday the inventory closed at $30.
With increasingly gamers getting into the area — start-up EV maker Rivian additionally introduced in July that it raised $2.5 billion in recent financing — competitors is rising. Moreover, Tesla’s previous supply points underline simply how tough it may be to convey an electrical automobile to market.
In keeping with Monday’s press launch, $675 million of anticipated gross proceeds can be used for the event and commercialization of Lordstown’s all-electric pickup, known as the Lordstown Endurance.
For the reason that prototype for the pickup truck was revealed on June 25, the corporate stated it has acquired greater than 27,000 pre-orders, which equates to greater than $1.four billion in potential income. The majority of the reservations are from industrial fleet clients. In November 2019 Lordstown Motors bought a 6.2 million sq. foot former Normal Motors meeting plant with a purpose to velocity its manufacturing course of.
The professional forma implied fairness worth of the merged firm is roughly $1.6 billion, which incorporates $75 million in investments from Normal Motors in addition to commitments from institutional traders together with Constancy Administration.
DiamondPeak holdings raised $250 million in its IPO in March 2019, with the corporate initially seeking to goal a “enterprise with an actual property associated part.”
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