Harley Davidson Spinning Off EV Unit LiveWire Via SPAC Deal: What Investors Should Know

A motorcycle powerhouse brand with over 100 years of industry experience is spinning off its electric vehicle segment in a deal announced Monday morning.

The SPAC Deal: LiveWire is merging with AEA-Bridges Impact Corp IMPX bringing the electric motorcycle division of Harley-Davidson Inc HOG public.

The merger values LiveWire at a pro forma enterprise value of $1.77 billion.

Harley-Davidson and strategic partner KYMCO, a Taiwanese motorcycle and sport vehicle manufacturer, are each investing $100 million in the deal.

The deal is expected to close in the first half of 2022. Public IMPX shareholders will own 17.3% of the new company. Harley-Davidson will own 74% of the new company and KYMCO will own 4% of the company. LiveWire will trade on the NYSE with the ticker LVW.

About LiveWire: With a plan to “redefine motorcycling,” LiveWire intends to be an industry-leading electric motorcycle company.

“By building on Harley-Davidson’s 118-year lineage, LiveWire’s mission is to be the most desirable electric motorcycle brand in the world, leading the electrification of the sport,” Harley-Davidson CEO Jochen Zeitz said.

Zeitz will serve as the Chairman and acting CEO of LiveWire for up to two years following the merger.

LiveWire has a ten-year relationship with Harley-Davidson and was established as a separate division in 2019.

The company’s LiveWire ONE is the current electric motorcycle model that comes with a price tag of around $20,000.

Related Link: Analyst Names Harley-Davidson Top Leisure Pick For 2022

Growth Ahead: LiveWire said it will benefit from its strategic partners, Harley-Davidson and KYMCO, and can leverage its engineering, manufacturing, distribution, supply chain infrastructure and global logistics capabilities.

LiveWire has a brand presence in North America and Europe and plans on expanding into additional markets, including Asia, in the future.

A total addressable market size of $20.4 billion by 2030 is listed for LiveWire, while the total addressable market is $2.5 billion for 2021.

LiveWire plans on selling its motorcycles through store-in-store models, gallery stores, pop-up retail stores and taking its motorcycles on the road to connect with riders and introduce them to the brand.

Harley-Davidson has over 1,400 global locations, which could serve as a launching point for LiveWire. Nationwide sales and support are planned for LiveWire by Harley-Davidson in the first half of 2022.

Harley-Davidson has a market share of 45% in North America, 6% in Europe and 68% in China for motorcycles in the 601+CC ICE market.

The company also has a product called STACYC, an all-electric balance bike for kids.

Financials: LiveWire is forecasting to sell 387 units in 2021 and 957 units in 2022. Unit expansion will hit six figures with estimates of 100,961 in fiscal 2026 and over 190,000 in fiscal 2030.

The company is forecasting revenue of $33 million in fiscal 2021 and $56 million in fiscal 2022. Revenue forecasts call for $1.8 billion in fiscal 2026 and $3.0 billion in fiscal 2030.

LiveWire expects to have gross margins of 18.6% in 2026 and has a long term goal of gross margins of 25% to 30%.

Price Action: HOG shares are up 10% to $40.46 on Monday.

IMPX shares are up 3% to $10.12 on Monday.