California EV startup Canoo is the latest to merge with a shell company and go public.
Just like they say at the barbershop, “NEXT!” In this case, EV maker Canoo is “next,” announce plans to roll out a $2.4 billion IPO this fall.
Canoo Holdings Ltd. hopes to use the proceeds secured by the offering, approximately $600 million, to move into the final phase of the production process, rolling out its first vehicles by the second quarter of 2022.
Following the playbook used by so many other EV makers in recent months, including Nikola Motors, Fisker Inc. and Lordstown Motors, Canoo will merge with a shell company. The hot market also drove Tesla Inc.’s stock price so high the company announced a 5-for-1 stock split later this month to gain more investors with the lower price.
(Hyundai partnering with specialty EV maker Canoo.)
Hyundai and Kia will use Canoo’s EV skateboard to underpin an electric vehicle about the size of the Hyundai Accent.
Hennessy Capital Acquisition Corp. IV, the special purpose acquisition company, or SPAC, will merge with Canoo Holdings and be renamed Canoo Inc. following the closing of the deal in the fourth quarter. It will trade on the Nasdaq under the ticker symbol “CNOO,” the companies said.
A SPAC is a shell company that raises money through an IPO to buy an operating entity, typically within two years. “A SPAC has for us a huge advantage because we can generate enough funding to accelerate our development process,” Ulrich Kranz, Canoo’s co-founder and chief executive, told Reuters.
The former BMW executive noted Hennessy’s history of success in these deals, including bus maker Blue Bird Corp.’s move to go public in 2015. Hennessey CEO Daniel Hennessy told Reuters he looked at more than a dozen EV startups to find the right deal. Ultimately, he was drawn to Canoo’s quicker path to commercialization.
(Fisker going public through merger with investor-backed shell company.)
Canoo vehicles are based on its “skateboard” platform it developed in-house. Skateboards are growing in popularity, used by Volkswagen, General Motors and other automakers because of their efficiency and flexibility. A lot of different vehicles can be built off a skateboard.
Canoo’s first offering will seat seven people comfortably.
In February, Canoo struck a deal to develop EVs with Hyundai Motor Co. Hyundai also has invested in UK electric van startup Arrival, another potential SPAC target, Reuters noted. Canoo’s current product offering is a large, seven-seat vehicle that will be available via subscription starting in the second quarter of 2022. Canoo has a letter of intent with Magna Steyr to build the vehicles, just as it is for Fisker Inc.
Commercial delivery vehicles will follow in 2023 and a sport sedan in 2025, Kranz said. Canoo’s current offering is expected have an electric driving range of more than 250 miles. The company plans to build 10,000 vehicles in 2022, with that number rising five times to 50K just two years later in 2024. The sports sedan arrives in 2026.
(Lordstown becomes latest to EV maker to go public.)
The Los Angeles-based EV maker projected 2024 revenue of $1.43 billion and its first profit at $188 million, during a conference call Tuesday morning.