Nikola Buys Battery Maker Romeo Power

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Nikola Tre BEV by Nikola Corp.

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Nikola Corp. has agreed to acquire energy-storage technology company Romeo Power for about $144 million, the Phoenix-based electric vehicle maker announced Aug. 1.

In a joint announcement, the companies said the acquisition will allow Nikola 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.

In addition, Romeo’s Cypress, Calif., facility will be renamed Nikola’s Battery Center of Excellence.

Mark Russell


“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,” Nikola CEO Mark Russell said. “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.”

He added, “Given our strong relationship with Romeo and ongoing collaboration, we are confident in our ability to successfully integrate and deliver the many expected strategic and financial benefits of this acquisition. We look forward to creating a zero-emissions future together.”

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.


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Nikola said in terms of the financial aspect, the proposed exchange ratio implies a consideration of 74 cents per Romeo share and represents approximately a 34% premium to Romeo’s July 29 closing share price and values 100% of Romeo’s equity, valued at $144 million.

Under terms of the agreement, Romeo stockholders will receive 0.1186 of a share of Nikola common stock for each Romeo share, representing 4.5% pro forma ownership of Nikola Corp.

On Jan. 18, Nikola announced a “long-term” strategy to power its electric Class 8 trucks with batteries from manufacturer Proterra. During the announcement of the Romeo purchase, Nikola officials insisted that agreement will remain in place.

“We are going to still be using Proterra; we committed to having a dual source strategy here,” Russell said on a conference call for analysts and reporters.

At the time of the Nikola-Proterra announcement, both companies said Proterra’s battery product was expected to be incorporated in the Nikola Tre battery-electric vehicle and Tre fuel cell-electric vehicle. The first Proterra-powered Nikola semi-trucks are expected to be produced in the fourth quarter.

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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“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. It is exciting to see Romeo joining the Nikola family.”

Founded in 2016, Romeo focuses on designing and manufacturing lithium-ion battery modules and packs for commercial vehicle applications. Nikola said that as Romeo’s largest customer, 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 has agreed to 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.

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