Xos will merge with ElectraMeccanica
According to the agreement with Xos, the truck manufacturer will take over “all of the issued and outstanding common shares of ElectraMeccanica in an all-stock transaction.” With the strategic merger, Xos hopes to increase its sales of electric vehicles, especially zero-emission medium-duty electric trucks, for which the demand continues to grow.
“We are a leader in producing robust electric commercial vehicles and are delivering positive gross margins today,” says Dakota Semler, Chief Executive Officer and Chairman of Xos. “We believe leveraging ElectraMeccanica’s assets will strengthen Xos’ leadership position in the robust commercial truck market and allow Xos to scale profitable vehicle sales.”
According to the press release, the members of the boards of both companies have already given the green light. The merger would bolster Xos’ balance sheet. The company’s strengthened financial profile and ElectraMeccElectraMeccanica’s 48.5 million dollar cash balance will be instrumental in meeting market demands.
“We believe “Xos’ combinXos’n with ElectraMeccanica will significantly strengthen our cash position and provide significant growth funding and runway to execute our business plan,” explains Liana Pogosyan, Chief Financial Officer of Xos. “We believe “that the cash provided in the transaction, combined with the reduced cash burn we have achieved as we have improved our margins, will provide runway to achieve our goals.”
The deal “is structured as a court-approved plan of arrangement under British Columbia’s Columbia’sorporations Act. Once complete, ElectraMeccanica shareholders will own about 21 per cent of Xos. The board will comprise nine members, six of which come from Xos.
The companies hope to complete the merger in the first half of this year. However, it is still subject to shareholder and court approvals.
The announcement comes after a previous merger agreement between ElectraMeccanica and the British electric truck manufacturer Tevva collapsed. The Canadian EV maker called off the deal in October, citing “several incurable breaches of the agreement” by its potential partner. In November, Tevva filed a lawsuit against ElectraMeccanica and CEO Susan Docherty in the US District Court in Arizona, seeking “redress for the improper and unmerited purported termination of the binding merger arrangement agreement with Tevva.”
Still, only a few days later, the companies agreed to rest any litigation to the arrangement agreement and continue “as independent companies with their respective business models.”
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