Hydrogen fuel cell truck developer Nikola Corp. plans to become a public company through a complex transaction that essentially is a reverse merger.
The deal values the Phoenix-based startup at about $3.3 billion.
Nikola will merge with VectoIQ Acquisition Corp., a NASDAQ-listed publicly-traded special purpose acquisition company. After the deal closes, the combined company will be named Nikola Corp. and will remain NASDAQ-listed under the new ticker symbol “NKLA.”
Cash raised through the transaction will be used to fund operations, support growth and for other general corporate purposes. Nikola also is developing battery-electric Class 8 trucks and other fuel cell vehicles. It needs funds to construct a factory in Arizona and build out a network of hydrogen fueling stations across highways in North America.
The company has partnered with London-based CNH Industrial, parent of truck maker IVECO, to gain manufacturing expertise and build its business in Europe.
The deal will be funded through a combination of VectoIQ’s cash and a $525 million private placement of common stock at $10 per share led by institutional investors including Fidelity Management & Research Company, ValueAct Spring Fund and P. Schoenfeld Asset Management LP. Current Nikola stockholders will remain majority owners, the company said.
Bosch Co., Hanwha Group, Wabco and NEL Hydrogen all are investors.
Nikola’s business model is to start by offering a battery-electric truck. The test fleet will be built in Germany and commercial production begins next year. Its hydrogen truck sales start in 2023. The company plans to offer the fuel cell trucks in leases that include fuel, maintenance and 700,000 miles of use for around $1 a mile. The leases are pegged to be competitive with the cost-of-ownership for a comparable diesel truck.
VectoIQ is an investment tool headed by Stephen Girsky, former vice chairman of General Motors Corporation.
“In our two-year quest to find a partner that was a proven technology leader and focused on making a global difference, Nikola was the clear winner,” Girsky said. “Nikola’s vision of a zero-emission future and ability to execute were key drivers in our decision.”
Such special purpose acquisition company transactions are becoming more common as a method of becoming a public company.
“This is an example of how a SPAC, coupled with a strong pipe, can be used as an alternative to a traditional IPO,” said Alan Annex, co-chair of Greenberg Traurig’s global corporate practice. “It’s faster and gives the target more control over the valuation.”
The law firm served as the legal advisor to VectoIQ.
Mark Russell, who joined Nikola as president last year, will become chief executive of the Nikola following the transaction. Trevor Milton, founder and Nikola’s current chief executive, becomes executive chairman. He will be responsible for vision and strategy. Girsky will join Nikola’s board of directors.
“The world is transitioning to zero-emission platforms and Nikola is the leader for heavy-duty vehicles. We believe we have a differentiated business model built on economics, not government subsidies. We now need to double down and speed up the timelines and get to market,” Milton said.