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EV maker Polestar strikes US$20-billion deal with Gores Guggenheim SPAC

EV maker Polestar strikes US$20-billion deal with Gores Guggenheim SPAC

FILE PHOTO: People look at a Polestar car during the Munich Auto Show, IAA Mobility 2021 in Munich, Germany, September 8, 2021. REUTERS/Michaela Rehle

:Swedish electric-car maker Polestar said on Monday it will go public by merging with a U.S.-listed blank-check firm backed by billionaire Alec Gores and investment bank Guggenheim Partners at an enterprise value of US$20 billion.The deal with Gores Guggenheim will provide Polestar cash proceeds of over US$1 billion, including US$800 million from the special purpose acquisition company (SPAC), and a PIPE, or private investment in public equity, of US$250 million from institutional investors.

Shares of Gores Guggenheim pared some earlier gains and were up over 4per cent in morning trading.

The deal comes at a time when large SPAC mergers have become rare, as the business of blank-check dealmaking deteriorated rapidly over the summer after investors were spooked by the poor financial performance of many SPACs and a regulatory crackdown led by the U.S. Securities and Exchange Commission over their disclosures.

Polestar, founded in 2017 by Volvo Car Group and China's Zhejiang Geely Holding, also counts Hollywood actor Leonardo DiCaprio among its investors.

The premium EV maker's offering includes two models: a hybrid car known as Polestar 1 and a fully electric Polestar 2. It previously said it has another model in development called the Precept, which is a larger sedan.

Polestar delivered about 10,000 vehicles globally last year and expects to sell about 290,000 vehicles per year by 2025. It predicts it will rake in US$1.6 billion in revenue this year and double that number next year.

RIDE ON EV BOOM

The company's listing plan comes as automakers shift their focus to environmentally friendly vehicles amid rising pressure from lawmakers and investors concerned about climate change.

Polestar joins other EV makers in the public market, including Tesla and Lucid Motors, which went public in a US$24 billion SPAC deal in February.

Polestar touts an asset-light business model as a key differentiator by having existing productions lines provided by backers Volvo and Geely, so it can focus on investing in research.

"We don't need the capital to build the factory. We can put the money raised into developing the technology and the market," Thomas Ingenlath, Polestar's chief executive, said in an interview.

The company raised US$550 million in external funding in April and announced plans in June to build Polestar 3 electric sport utility vehicles at Volvo's U.S. plant in South Carolina beginning next year.

Current equity holders of Polestar, who will roll their entire interest in the combined company, will retain about 94per cent ownership, it said.

Volvo said on Monday it will make additional equity investments in Polestar of up to US$600 million and is expected to hold about 50 percent of the combined company.

SPACs are publicly listed companies that are raised with the intention of merging with a private company at a later date. For the company going public, a SPAC merger serves as an alternative to a traditional IPO.

Once the deal is completed, Polestar will trade under the ticker symbol PSNY on the Nasdaq.

(Reporting by Krystal Hu in New York, Nick Carey in London, Sohini Podder and Anirban Sen in Bengaluru; Editing by Peter Cooney, Krishna Chandra Eluri and Shailesh Kuber)

Source: Reuters

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