Nikola to acquire Romeo Power
By Becky Schultz01 August 2022
Nikola Corp. and Romeo Power Inc. have entered into a definitive agreement in which Nikola will acquire Romeo, a Cypress, Calif.-based energy storage technology company, in an all-stock transaction that will provide Nikola with domestic battery pack manufacturing capability.
Nikola, a global provider of zero-emissions transportation and energy infrastructure solutions, describes the acquisition of Romeo – which focuses on designing and manufacturing lithium-ion battery modules and packs for commercial vehicle applications – as an important strategic move that will bring Romeo’s deep battery and battery management system (BMS) engineering capabilities in-house. The move is expected to support accelerated product development and improved performance for Nikola customers, the company noted in announcing the acquisition.
“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.
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.”
Nikola expects the acquisition to allow for significant operational improvement and cost reduction in battery pack production. It estimates the integrated commercial vehicle electrification platform will result in a 30% to 40% reduction in non-cell related battery pack costs by the end of 2023 and annual cost savings of up to $350 million by 2026.
Under the terms of the agreement, Nikola will commence an exchange offer to acquire all outstanding shares of Romeo common stock. 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, at which time a newly-formed subsidiary of Nikola will be merged into Romeo.