Why SPAC 10X Capital’s share jumped today
Actions of 10X venture capital acquisition (VCVC) were up sharply on Wednesday, after the specialist acquisition company (SPAC) announced its merger with electric vehicle platform maker REE Automotive.
As of 3 p.m. EST, 10X Capital stock was up about 43.8% from Tuesday’s closing price.
REE Automotive has developed a series of electric vehicle “platforms” which can be used as the basis for many different types of vehicles. In industrial terms, REE’s products are flat electric vehicle “skateboards” that are modular, meaning that the components can be arranged to support vehicles of various shapes and sizes.
The idea is that with REE platforms, commercial fleet customers can create electric vehicles tailored to their needs at a reasonable cost and with a low total cost of ownership.
Here are the highlights of the merger deal announced on Wednesday:
- 10X Capital is contributing approximately $ 200 million in cash to the transaction.
- The merged company will receive an additional $ 300 million through a fully committed “PIPE” (private investment in public capital). PIPE investors include a major supplier to the automotive industry Magna International (MGA 0.68% ) and Indian truck manufacturer Mahindra and Mahindra (MAHMF -0.81% ). PIPE was “oversubscribed,” 10X said, meaning there was more investor interest than it could accommodate.
- The deal values the merged company at $ 3.6 billion.
REE expects to begin mass production of its platforms in 2023 and generate sales of $ 19.1 billion by 2026. Its order backlog has “indications of interest” for more than 250,000 of its platforms, he said, representing 27% of that expected turnover.
Auto investors have known that stocks of electric vehicles have been hot for months. That’s why shares of this PSPC surged after the deal was announced with REE on Wednesday.
If all goes according to plan, the merger should be finalized by the end of June.
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