EV Maker Canoo To Go Public Via SPAC Merger At $2.4B Valuation By Year-End

Canoo Holdings Ltd, an electric vehicle company, announced Tuesday it was going public later in 2020 at a valuation of $2.4 billion and will commence vehicle deliveries by 2020, Reuters reported.

What Happened

The California-based startup already has a partnership with South Korea’s Hyundai Motor Co HYMTF and will merge itself with a special purpose acquisition company to go public, according to Reuters.

The agreement with Hennessy Capital Acquisition Corp IV HCAC is likely to be concluded by the fourth quarter and the new entity would reportedly 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 BLK, as well as other investors. Hennessy raised $300 million in its IPO March last year.

The reverse-merger announcement takes place in the backdrop of the rising popularity of EVs and burgeoning valuation of market leader Tesla Inc TSLA, whose shares have returned 352% year-till-date.

Why It Matters

Canoo’s low-rise platform can be used to make a variety of EV vehicles, according to Reuters. The first of its vehicles would be a seven-seat van available in 2022, after which the company plans to release a small commercial delivery vehicle in 2023 and a sports sedan in 2025, CEO Ulrich Kranz said.

The executive disclosed the company’s plans to expand to China and sell its vehicles through a subscription model instead of through traditional dealerships. 

The EV maker projected revenue in 2024 to be $1.43 billion and profit at $188 million at a conference call. 

The SPAC model of going public is gaining traction among EV companies. In June, Nikola Corporation NKLA went public after merging with VectoIQ Acquisition.

Fisker Inc has also said it plans to go public via a merger with blank check company Spartan Energy SPAQ in October.

Self-driving vehicle radar firm Velodyne Lidar Inc. announced last month it was similarly going public through a merger with Graf Industrial Corp GRAF.

Price Action 

Hennessy shares closed nearly 1.8% lower at $10.49 on Tuesday.