Nikola Is Buying Struggling Battery Maker Romeo Power For $144 Million
Nikola, a maker of battery- and hydrogen-powered trucks, is acquiring battery supplier Romeo Power in an all-stock deal worth $144 million that it says will ensure stable access to lithium-ion packs as it ramps up electric semi production.
Boards of Phoenix-based Nikola and Romeo agreed to an offer of $0.74 per share, a 34% premium to Romeo’s July 29 closing price, Nikola CEO Mark Russell tells Forbes. Nikola will also provide Romeo with $35 million of funding to stabilize its operations until the deal closes —$15 million in senior secured notes and a battery pack delivery bonus worth up to $20 million. The deal still needs approval from shareholders and is expected to close later this year.
Nikola is Romeo’s main customer so “part of this is defensive, to make sure nothing disruptive happens here,” Russell said. “But the real motivation is strategic: we’re taking control of our battery destiny and bringing this in-house.”
Battery supplies are a priority for truck- and automakers pivoting from environmentally unfriendly fuels to electric propulsion amid a worsening climate crisis. The Biden Administration has already announced loan and grant programs intended to spur domestic battery production. Meanwhile, new energy legislation making its way through the Senate could provide significantly more federal funds to aid production of electric and hydrogen vehicles and incentives for consumers and commercial fleet operators to buy them.
“If what ends up going into law does include that purchase incentive and the production tax credit for the hydrogen, those are two things that are very strategic to us and to the industry,” Russell said.
Nikola also gets battery packs from Silicon Valley-based electric truck and bus maker Proterra and will continue to do so after the Romeo acquisition, Russell said. It’s adding 400 Romeo employees and the company’s Cypress operations will become Nikola’s Battery Center of Excellence.