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Zero-emission transportation company Nikola Corp. made two significant announcements concerning the company’s overall direction.
Nikola on Aug. 30 said two leadership changes have been made effective immediately, and a day earlier announced it has commenced an exchange offer to purchase all outstanding shares of common stock of energy-storage technology company Romeo Power Inc.
The company is splitting its Energy and Commercial division; Pablo Koziner, currently president of Energy and Commercial, now is president of Commercial. Carey Mendes, who runs the Global Energy Finance division, has been named president of Energy. Koziner and Mendes will report to President Michael Lohscheller, who also will become CEO on Jan. 1.
Koziner (left) and Mendes
Koziner will lead Nikola’s sales activities, including business development, sales, service, dealer network and charging solutions. He joined Nikola in June 2020 and has played a key role in expanding the company’s hydrogen infrastructure capabilities, including the recent announcement of three California hydrogen station locations to advance and scale up Nikola’s long-term hydrogen distribution solutions to service market demand.
Mendes joined Nikola in October, and he brings more than 20 years of operational expertise and experience in the energy and renewables space. As president of Energy, Mendes will be responsible for business that includes infrastructure, supply and trading, technology and development, and finance.
“Today’s appointments reflect the depth of our executive team and our focus on helping the industry transition to zero emissions through the sales of Nikola’s battery-electric and hydrogen fuel cell-electric trucks and the energy infrastructure to support them,” Lohscheller said. “It is an exciting and pivotal time for Nikola, and these new positions for Pablo and Carey will place greater focus on two critical parts of our business and help drive our next phase of growth.”
Meanwhile, on Aug. 1, Nikola and Romeo jointly announced they had entered into a definitive agreement for the all-stock transaction. Nikola said under terms of the agreement, Romeo stockholders will receive 0.1186 of a share of Nikola common stock for each Romeo share, representing an approximate 4.5% pro forma ownership of Nikola. The proposed exchange ratio represents an approximately 34% premium to Romeo’s July 29 closing share price.
“Upon the successful completion of the 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 as provided for in the exchange offer,” Nikola said in a statement.
Nikola agreed to buy Romeo for about $144 million, the Phoenix-based electric vehicle maker announced earlier this month. It said the acquisition will allow it to secure control of the battery pack engineering and production process. That projects to annual cost savings of up to $350 million by 2026 by reducing non-cell-related battery pack costs by 30-40% by the end of next year.
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In addition, Romeo’s Cypress, Calif., facility will be renamed Nikola’s Battery Center of Excellence.
Officials from both companies said their respective boards of directors have approved the sale, which they expect to be completed by the end of October.
Romeo officials believe the sale will improve the industry’s move toward electric vehicles.
“As Romeo’s largest customer, Nikola has been a cornerstone of our development and growth, and this is a natural evolution of our relationship,” Romeo Chairman Robert Mancini said in a statement. “Our products provide critical energy density important to heavy-duty vehicles, combined with safety performance and battery management software.
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Founded in 2016, Romeo focuses on designing and manufacturing lithium-ion battery modules and packs for commercial vehicle applications. Nikola said that it 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 engineering capabilities are also expected to support accelerated product development and improved performance for Nikola customers,” the EV manufacturer said.
As part of the agreement, Nikola will 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.
According to Bloomberg News, Nikola’s acquisition of Romeo is for just a sliver of what the battery maker was worth when it merged with a special purpose acquisition company less than two years ago.