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EV maker Polestar strikes $20-billion deal with Gores Guggenheim SPAC

Stock MarketsSep 27, 2021 11:00AM ET
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© Reuters. FILE PHOTO: People look at a Polestar car during the Munich Auto Show, IAA Mobility 2021 in Munich, Germany, September 8, 2021. REUTERS/Michaela Rehle

By Krystal Hu and Nick Carey

(Reuters) -Swedish electric-car maker Polestar said on Monday it will go public by merging with a U.S.-listed blank-check firm backed by billionaire Alec Gores and investment bank Guggenheim Partners at an enterprise value of $20 billion.The deal with Gores Guggenheim will provide Polestar cash proceeds of over $1 billion, including $800 million from the special purpose acquisition company (SPAC), and a PIPE, or private investment in public equity, of $250 million from institutional investors.

Shares of Gores Guggenheim pared some earlier gains and were up over 4% in morning trading.

The deal comes at a time when large SPAC mergers have become rare, as the business of blank-check dealmaking deteriorated rapidly over the summer after investors were spooked by the poor financial performance of many SPACs and a regulatory crackdown led by the U.S. Securities and Exchange Commission over their disclosures.

Polestar, founded in 2017 by Volvo Car Group and China's Zhejiang Geely Holding, also counts Hollywood actor Leonardo DiCaprio among its investors.

The premium EV maker's offering includes two models: a hybrid car known as Polestar 1 and a fully electric Polestar 2. It previously said it has another model in development called the Precept, which is a larger sedan.

Polestar delivered about 10,000 vehicles globally last year and expects to sell about 290,000 vehicles per year by 2025. It predicts it will rake in $1.6 billion in revenue this year and double that number next year.

RIDE ON EV BOOM

The company's listing plan comes as automakers shift their focus to environmentally friendly vehicles amid rising pressure from lawmakers and investors concerned about climate change.

Polestar joins other EV makers in the public market, including Tesla (NASDAQ:TSLA) and Lucid Motors, which went public in a $24 billion SPAC deal in February.

Polestar touts an asset-light business model as a key differentiator by having existing productions lines provided by backers Volvo and Geely, so it can focus on investing in research.

"We don't need the capital to build the factory. We can put the money raised into developing the technology and the market," Thomas Ingenlath, Polestar's chief executive, said in an interview.

The company raised $550 million in external funding in April and announced plans in June to build Polestar 3 electric sport utility vehicles at Volvo's U.S. plant in South Carolina beginning next year.

Current equity holders of Polestar, who will roll their entire interest in the combined company, will retain about 94% ownership, it said.

Volvo said on Monday it will make additional equity investments in Polestar of up to $600 million and is expected to hold about 50 percent of the combined company.

SPACs are publicly listed companies that are raised with the intention of merging with a private company at a later date. For the company going public, a SPAC merger serves as an alternative to a traditional IPO.

Once the deal is completed, Polestar will trade under the ticker symbol PSNY on the Nasdaq.

EV maker Polestar strikes $20-billion deal with Gores Guggenheim SPAC
 

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Comments (4)
rizwan aslam
rizwan aslam Sep 26, 2021 11:41PM ET
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I never buy ev car
Pat Mathieu
Pat Mathieu Sep 26, 2021 8:26PM ET
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Reuters spreading Big Lies as usual: Polestar is not Swedish it's 100% Chinese (Geely).
The New Perennialist
The New Perennialist Sep 26, 2021 8:26PM ET
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Not true.Volvo owns 49.5% and Geely owns 50.5%. Get your facts straight please.
Kaveh Sun
Kaveh Sun Sep 26, 2021 8:00PM ET
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Companies sell zero ev cars value billions ipo. There r much scam. since ‘ev’ is the future, mom n pop investors dont want to miss out the ‘next industry evolution’.
Henry Lee
Henry Lee Sep 26, 2021 8:00PM ET
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The market give us choices. We can buy dividend stock which is already over priced or buy promising growth stock with long term investment in mind
Reis Shimabukuro
Reis Shimabukuro Sep 26, 2021 7:37PM ET
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Volvo has a market cap of $53.4B...how does a EV start up pull a $20B vaulation pre-revenue
Nabil Belmamoun
Nabil Belmamoun Sep 26, 2021 7:37PM ET
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maybe bc their products are already on the market unlike other EV compagnies and I saw couple ones in Canada...for the valuation when u compare it to nio, arrival,.... I think It s fair value I guess
Jon Engström
Sanchopanz Sep 26, 2021 7:37PM ET
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Volvo cars is not public. The Volvo you on the stock market is a different company with shared brand, producing trucks and other machinery.
Pat Mathieu
Pat Mathieu Sep 26, 2021 7:37PM ET
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Yes, it's an EV Scam, one among hundreds of Chinese EV scam. I will disappear as quickly as it appeared.
The New Perennialist
The New Perennialist Sep 26, 2021 7:37PM ET
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Pat Mathieu  Not true.Volvo owns 49.5% and Geely owns 50.5%. Get your facts straight please. I drive a Polestar 2 – it has fantastic reviews in Europe and North America.
 
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