North American Electric Bus Leader Proterra SPAC Deal: What Investors Should Know

A leading electric bus maker is going public via SPAC in a deal announced Tuesday morning.

The SPAC Deal: Electric bus leader Proterra is being taken public by ArcLight Clean Transition Corp ACTC.

The deal values Proterra with an enterprise value of $1.6 billion. Current ArcLight shareholders will own 11.6% of Proterra after the merger. Shares of Proterra will trade as PTRA on the Nasdaq after the merger.

The merger includes a $415 million PIPE anchored by Daimler Trucks. Also included in the PIPE are Fidelity, Franklin Templeton, BlackRock and Chamath Palihapitiya. PIPE shareholders will own 17.3% of Proterra after the merger.

About Proterra: Proterra has over a decade of experience in production as an end-to-end platform for electric buses. The company has three complementary businesses with Proterra Powered offering batteries and electrification, Proterra Transit as the leading electric transit bus OEM in North America and Proterra Energy, an end-to-end turnkey charging management system.

The company has completed 16 million service miles driven with its buses. Over 550 heavy-duty electric transit buses have been delivered. The company also has installed 54 megawatts of charging systems.

Proterra has over 50% market share for electric transit buses in North America.

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Growth Plan: A new battery manufacturing facility was built in California in less than 12 months. The facility is part of the gross margin expansion for the company.

Since 2017, the company has reduced its battery unit costs by 86% and labor/overhead costs by 55%. The company has $750 million in orders and its existing backlog.

Proterra calls its addressable market size $260 billion. The call for zero emissions in 15 states by 2050 could create strong demand for the company’s buses.

Daimler is a major customer for Proterra and part of the growth plan. Daimler is the manufacturer of one of three school buses on the road. Deliveries to Daimler are expected in 2021. Daimler has over 300,00 vehicles in the United States, which could make this partnership a key for growth.

Financials: Proterra is guiding for revenue to hit $193 million in fiscal 2020.

The transaction is being done at 3.6x 2022 estimated revenue of $439 million and 0.6x 2025 estimated revenue of $2.57 billion. Proterra is forecasting a compounded annual growth rate of 68% from 2020 to 2025 made up of 39% growth for transit and 114% growth for electrification.

Benzinga’s Take: ArcLight was called out on Benzinga's SPACs Attack as a SPAC with ties to President-elect Joe Biden.

Audrey Lee, a member of ArcLight is the Co-Chair of the Clean Energy for Biden organization. The ties to the Biden administration, growing calls for electric buses from Biden and Palihapitiya being part of the PIPE could all be bullish signs for growth ahead for Proterra.

Price Action: Shares of ArcLight Clean Transition are up 56% to $19.07. Qell Acquisition Corp. QELL shares are down 8% to $11.37. The SPAC was rumored to merge with Proterra and will now need to find a different target.