LONDON – British electric vehicle start-up Arrival announced on Wednesday that it would go public through a merger with a US blank check company.
This year, numerous SPACs or acquisition companies came into the market for special purposes as companies avoided the traditional IPO process. SPACs are companies that raise funds to fund a merger that brings the target company to the public.
In the case of Arrival, the London-based company will partner with CIIG Merger Corp, a SPAC founded by US businessman Peter Cuneo. Cuneo previously headed the American personal care brand Remington and the comic book publisher Marvel as CEO. He will join the board of Arrival as non-executive chairman while founder Denis Sverdlov will remain as CEO.
The deal gives Arrival an enterprise value of $ 5.4 billion – most recently privately in January at € 3 billion ($ 3.5 billion) – with the combined company expected to generate gross proceeds of $ 660 million . The arrival will be listed on the Nasdaq under the ticker symbol "ARVL". The deal is expected to close in early 2021.
What is arrival
Arrival competes with Rivian, a company backed by Amazon, in the electric delivery van space. The US parcel service UPS, which is also an investor in the company, received a major order for 10,000 vehicles. Other supporters of Arrival include Hyundai, Kia and BlackRock.
According to Arrival, it stands out from other electric vehicle manufacturers because it focuses solely on the commercial market and does not sell to consumers. Founded in 2015, Arrival says its technology is "vertically integrated" from production to development.
The two main vehicle products are vans and buses. Avinash Rugoobur, president of Arrival, told CNBC that production on his bus is expected to begin in the fourth quarter of next year, while delivery truck production is set to begin in the second quarter of 2022.
"Our technology is at a stage of maturity where we now want to scale the company quickly," said Rugoobur in an interview with CNBC on Wednesday.
Rugoobur added that the rise in market value of electric car maker Tesla by Elon Musk, who is now the world's most valuable automaker, is a confirmation of the green energy transition. Arrival's vehicles can be sold at a price similar to diesel vehicles and even cheaper, he said.
Another thing that the company calls unique is the production model. The company has developed so-called "micro-factories", which are much smaller than traditional car production lines and can be packed into existing warehouse properties.
The goal is to build three to four of these factories per year, which take up around 20,000 square feet and cost $ 45 million.
SPACs have proven to be an increasingly popular way for businesses to list in the United States. A number of companies, from space transportation company Momentus to direct-to-consumer healthcare company Hims, are merging with blank check companies.
Nikola, one of the most famous electric vehicle companies that has taken the SPAC path, has been the subject of heated controversy this year. Trevor Milton, Nikola CEO, resigned after a scathing report by short seller Hindenburg Research accusing him of fraud. Milton called the allegations "false".