Nikola To Buy Romeo Power In $144 Mln All-stock Deal – Quick Facts

Nikola Corp. (NKLA), a manufacturer of zero-emission battery-electric and hydrogen-electric vehicles, announced Monday that it has agreed to acquire Romeo Power, Inc. (RMO) in around $144 million in all-stock deal.

In pre-market activity, Romeo Power shares were gaining around 23.6 percent to trade at $0.68 on the NYSE, while Nikola shares were losing around 1.5 percent to trade at $6.13 on Nasdaq.

Under the deal terms, Nikola will commence an exchange offer, and Romeo stockholders will receive 0.1186 of a share of Nikola common stock for each Romeo share, representing 4.5% pro forma ownership of Nikola.

In the 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 closing share price.

The Boards of Directors of both companies approved the deal, which is expected to be completed by the end of October 2022, subject to certain conditions.

Upon the deal closure, a newly-formed subsidiary of Nikola will be merged into Romeo.

Nikola has agreed to provide Romeo with $35 million in interim funding to facilitate continued operations through closing.

California -based Romeo, an energy technology company, manufactures lithium-ion battery modules and packs for commercial vehicle applications.

Nikola, Romeo’s largest customer, expects the acquisition will allow for significant operational improvement and cost reduction in battery pack production.

It is expected that the integrated commercial vehicle electri?cation platform would lead to manufacturing excellence and expected annual cost savings of up to $350 million by 2026.

It will reduce non-cell related battery pack costs by 30-40% by the end of 2023.

In the deal, Citigroup Global Markets Inc. acted as sole financial advisor to Nikola and Morgan Stanley & Co. LLC acted as sole financial advisor to Romeo.

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