Romeo Power shares up 20% after announcing it was being acquired by Nikola
Romeo Power Inc. (NYSE: RMO) stock rose 20% after announcing an all-stock purchase agreement with Nikola (NASDAQ: NKLA). The company announced it had executed a definitive purchase agreement whereby it will be acquired by Nikola in an all-stock deal.
Details of the agreement
The proposed purchase ratio implies a 75c per Romeo Power share consideration, representing a premium of roughly 34% of the company’s closing share price of July 29, 2022. The deal values 100% of Romeo Power’s equity at roughly $144 million.
With its headquarters in Cypress, CA, Romeo power is an energy storage tech corporation that concentrates its efforts on manufacturing and designing lithium-ion battery packs and modules for commercial vehicle applications.
Nikola, being Romeo Power’s biggest customer, expects the deal to help encourage significant operational enhancements and reduce the cost of producing battery packs. The company also claims that the addition of Romeo power’s battery management system engineering capabilities will also help accelerate improved performance and product development for Nikola customers.
Single product focus and vertical integration will help drive significant cost reduction and operational enhancement for one of the bill of materials’ most expensive components.
Chief Executive Officer of Nikola, Mark Russell, said:
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.
Mr. Russell claimed that the strong relationship between the two companies will allow for a successful integration process and help them realize the many expected financial and strategic benefits that’ll come from the deal.
Romeo’s Chairman of the Board, Robert Mancini, 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.
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