- Acquisition will secure control of critical battery pack
engineering and production process
- Transaction expected to yield annual cost savings of up to
$350 million by 2026
- Romeo's Cypress, California
facility will become Nikola's Battery Center of Excellence
- Nikola to host analyst and investor webcast on August 1 at 11:00 a.m.
Eastern Time (8:00 a.m. Pacific
Time)
PHOENIX, Aug. 1, 2022
/PRNewswire/ -- Nikola Corporation (NASDAQ: NKLA), and
Romeo Power, Inc. (NYSE: RMO), today
announced they 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.
Headquartered in Cypress,
California, Romeo is an energy storage technology company
focused on designing and manufacturing lithium-ion battery modules
and packs for commercial vehicle applications. As Romeo's largest
customer, Nikola expects the acquisition will allow for significant
operational improvement and cost reduction in battery pack
production. The addition of Romeo's battery and battery management
system (BMS) engineering capabilities are also expected to support
accelerated product development and improved performance for Nikola
customers.
"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."
Robert Mancini, Romeo Power's Chairman of the Board of
Directors, added, "As Romeo's largest customer, Nikola has been a
cornerstone of our development and growth, and this is a natural
evolution of our relationship. Our products provide critical energy
density important to heavy-duty vehicles, combined with safety
performance and battery management software. Following an
extensive review of alternatives, we firmly believe that this
combination offers the best opportunity for Romeo shareholders to
participate in the ongoing value creation at a larger scale,
stronger combined company. It is exciting to see Romeo joining the
Nikola family."
Compelling Strategic Rationale
- Vertical integration and single product focus will drive
significant operational improvement and cost reduction for one of
the most expensive components of the bill of materials
- 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
Exchange Offer
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.
Interim Liquidity Support
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.
Investor Presentation
A supplemental presentation
regarding the transaction is available on the Investor Relations
section of the Nikola website.
Webcast and Conference Call Information
Nikola will
host a webcast for analysts and investors at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) on August 1, 2022 at
https://www.webcast-eqs.com/nikola20220801/en.
For those unable to participate in the live session, a recording
of the webcast will be available on Nikola's Investor Relations
website.
Advisors
Citigroup Global Markets Inc. acted as sole
financial advisor to Nikola on the transaction, and Pillsbury
Winthrop Shaw Pittman LLP served as legal advisor.
Morgan Stanley & Co. LLC acted as sole financial advisor to
Romeo on the transaction, and Latham & Watkins LLP served as
legal advisor.
Nikola Annual Meeting of Stockholders
Nikola's Annual
Meeting of Stockholders is being held on Tuesday, August 2, 2022, at 3:00 p.m. Pacific Time. Nikola intends to file
today a supplement to its proxy statement for the Annual Meeting.
Nikola has sufficient shares of authorized but unissued common
stock available to complete the proposed transition and will not
need to use any of the share increase being considered at the
Annual Meeting.
About Nikola Corporation
Nikola Corporation is
globally transforming the transportation industry. As a designer
and manufacturer of zero-emission battery-electric and
hydrogen-electric vehicles, electric vehicle drivetrains, vehicle
components, energy storage systems, and hydrogen station
infrastructure, Nikola is driven to revolutionize the economic and
environmental impact of commerce as we know it today. Founded in
2015, Nikola Corporation is headquartered in Phoenix, Arizona. For more information, visit
www.nikolamotor.com or Twitter @nikolamotor.
About Romeo Power,
Inc.
Founded in 2016 and headquartered in Cypress, California, Romeo Power (NYSE: RMO) is an energy technology
leader delivering advanced electrification solutions for complex
commercial vehicle applications. The Company's suite of advanced
battery electric products, combined with its innovative battery
management system, delivers the safety, performance, reliability
and configurability its customers need to succeed. To keep up with
everything Romeo Power, follow the
Company on social media, @romeopowerinc or
visit romeopower.com
Additional Information and Where to Find It
The
exchange offer referenced in this communication has not yet
commenced. This communication is for informational purposes only
and is neither an offer to purchase nor a solicitation of an offer
to sell securities, nor is it a substitute for any offer materials
that Nikola Corporation ("Nikola"), its acquisition subsidiary or
Romeo Power, Inc. ("Romeo") will
file with the U.S. Securities and Exchange Commission (the "SEC").
At the time the exchange offer is commenced, Nikola and its
acquisition subsidiary will file a tender offer statement on
Schedule TO, Nikola will file a registration statement on Form S-4
and Romeo will file a Solicitation/Recommendation Statement on
Schedule 14D-9 with the SEC with respect to the exchange offer. THE
EXCHANGE OFFER MATERIALS (INCLUDING AN OFFER TO EXCHANGE, A RELATED
LETTER OF TRANSMITTAL AND CERTAIN OTHER EXCHANGE OFFER DOCUMENTS)
AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN
IMPORTANT INFORMATION. ROMEO STOCKHOLDERS ARE URGED TO READ THESE
DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF ROMEO SECURITIES
SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING EXCHANGING
THEIR SECURITIES. The Solicitation/Recommendation Statement, the
Offer to Exchange, the related Letter of Transmittal and certain
other exchange offer documents will be made available to all Romeo
stockholders at no expense to them. The exchange offer materials
and the Solicitation/Recommendation Statement will be made
available for free on the SEC's website at www.sec.gov. Copies of
the documents filed with the SEC by Nikola will be available free
of charge by contacting Investor Relations, Nikola Corporation,
4141 E Broadway Road, Phoenix,
Arizona 85040. Copies of the documents filed with the SEC by
Romeo will be available free of charge by contacting Investor
Relations, Corporate Secretary, Romeo
Power, Inc., 5560 Katella Avenue, Cypress, California 90630.
Forward-Looking Statements
This press release contains
forward-looking statements within the meaning of federal securities
laws, including statements relating to the exchange offer, the
proposed merger, the anticipated benefits of the proposed merger,
including potential cost savings, synergies and performance
improvements, the expected benefits of any liquidity support, the
expected financial impact of the proposed transaction on Nikola,
Nikola's expectations regarding its ongoing liquidity needs and
ability to satisfy those needs, and Nikola's expectations regarding
the closing of the merger. These forward-looking statements
generally are identified by words such as "believe," "project,"
"expect," "anticipate," "estimate," "intend," "strategy," "future,"
"opportunity," "plan," "may," "should," "will," "would," and
similar expressions. Forward-looking statements are predictions,
projections and other statements about future events that are based
on current expectations and assumptions and, as a result, are
subject to risks and uncertainties. Many factors could cause actual
future events to differ materially from the forward-looking
statements in this press release, including but not limited: risks
related to the ability of Nikola to consummate the proposed
transaction on a timely basis or at all; the satisfaction of the
conditions precedent to consummation of the proposed transaction,
including having a sufficient number of Romeo's shares being
validly tendered into the exchange offer to meet the minimum
condition; the ability of Romeo and Nikola to receive the required
regulatory approvals for the proposed acquisition; the occurrence
of events that may give rise to a right of one or both of the
parties to terminate the merger agreement; Nikola's ability to
successfully integrate Romeo's battery pack production into its
business; Nikola's ability to realize expected synergies, benefits,
cost savings and performance improvements; the ability to realize
the anticipated benefits of the proposed transaction, including the
possibility that the expected benefits from the proposed
transaction will not be realized or will not be realized within the
expected time period; the risk that disruption from the proposed
acquisition may make it more difficult to maintain business and
operational relationships; the potential negative effects of the
announcement or the consummation of the proposed transaction on the
market price of Nikola's common stock or on its business or
operating results; the risk of litigation or regulatory actions
related to the proposed transaction; the effect of the announcement
or pendency of the transaction on Romeo's business relationships,
operating results, and business generally; risks relating to
significant transaction costs and known or unknown liabilities;
risks associated with third party contracts containing consent or
other provisions that may be triggered by the proposed transaction;
the ability of Nikola to continue to obtain sufficient capital to
support its business; and the ability of the parties to retain and
hire key personnel. There can be no assurance that the proposed
transaction or any other matters described above will in fact be
consummated in the manner described or at all.
For additional information regarding factors that may cause
actual results to vary materially from those stated in
forward-looking statements, see the reports of Nikola and Romeo on
Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from
time to time. These forward-looking statements are made only as of
the date hereof and Nikola and Romeo disclaim any obligation to
update any forward-looking statement, except as required by
law.
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SOURCE Nikola Corporation; Romeo Power Inc.
