Canoo Holdings Ltd, an electric car company, announced on Tuesday that it would go public at a valuation of $ 2.4 billion later in 2020 and will begin delivering cars by 2020, Reuters reported.
What happened
The California-based startup already has a partnership with Hyundai Motor Co. of South Korea (OTC: HYMTF) and will merge with a special procurement company to go public, according to Reuters.
The agreement with Hennessy Capital Acquisition Corp IV (NASDAQ: HCAC) is likely to close in the fourth quarter and the new entity would presumably be called Canoo Inc., whose shares will trade on the Nasdaq Stock Market with the ticker “CNOO.”
The deal will raise $ 607 million, which includes additional funds from BlackRock Inc (NYSE: BLK), as well as other investors. Hennessy raised $ 300 million in its IPO in March last year.
The announcement of reverse merger takes place against the backdrop of the growing popularity of EVs and growing market leader appreciation Tesla Inc (NASDAQ: TSLA), whose shares have returned 352% year-on-date.
Why it matters
Canoo’s low-rise platform can be used to make a variety of EV cars, according to Reuters. The first of its cars would be a seven-seater van available in 2022, after which the company plans to release a small commercial delivery vehicle in 2023 and a sports sedan in 2025, said CEO Ulrich Kranz.
The executive revealed the company’s plans to expand to China and sell its cars through a subscription model instead of through traditional dealerships.
The EV maker projected revenue in 2024 to be $ 1.43 billion and profit to $ 188 million at a conference call.
The public SPAC model is gaining traction among EV companies. In June, Nikola Corporation (NASDAQ: NKLA) went public after merging with VectoIQ Acquisition.
Fisker Inc. has also said it intends to go public through a merger with company for low controls Spartan Energy (NYSE: SPAQ) in October.
Self-driving car radar company Velodyne Lidar Inc. announced last month that the similar public was going through a merger with Graf Industrial Corp (NYSE: GRAPH).
Price action
Hennessy shares closed nearly 1.8% lower at $ 10.49 on Tuesday.
© 2020 Benzinga.com. Benzinga does not offer investment advice. All rights reserved.
