Nikola Corporation shares soared higher Tuesday, after the battery- and hydrogen-electric vehicles maker disclosed a large equity investment by General Motors Co., as well as a “potential game changing” partnership to build the Nikola Badger pickup truck.
The Phoenix-based Nikola (NKLA) said in a filing with the Securities and Exchange Commission that it entered into a subscription agreement last Thursday in which it will issue and sell 47.7 million shares of common stock to GM (GM) valued at $2.0 billion.
The value of the agreement was based on a stock price of $41.93, which was 16.1% above Thursday’s closing price of $36.13, but 16.2% below Tuesday’s closing price of $50.05. Nikola said the price per share was based on a volume-weighted average price over “a period of time” ending Sept. 2.
The stock soared 40.8% in very active trading, to the highest close since July 16. Trading volume ballooned to 133.2 million shares, enough to make the stock the third-most active on the Nasdaq exchange, according to FactSet, and well more than the full-day average of about 15.5 million shares.
“You couldn’t dream of a better partnership than this,” said Nikola Founder and Executive Chairman Trevor Milton. “By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multibillion-dollar fuel cell program ready for production.”
And as part of the agreement, GM will provide Nikola access to its parts and components, including its Ultium battery technology, and GM will engineer, sanction, validate and manufacture the battery-electric and fuel-cell versions of Nikola’s Nikola Badger truck.
Wedbush analyst Dan Ives said the partnership was a “potential game changing” deal for Nikola, as it could save the company more than $4 billion in battery and powertrain costs over the next decade, and more than $1 billion in engineering and validation costs.
Nikola will remain responsible for the sales and marketing of the Badger, which is expected to make its public debut at Nikola World 2020 in Arizona, scheduled for Dec. 3 to Dec. 5. Badger production is expected to start in late 2022, at a location to be announced later.
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