[Mesa, Arizona, and London, United Kingdom] ElectraMeccanica, a cutting-edge EV designer and assembler, and Tevva, an industry trailblazer in electric medium- and heavy-duty commercial vehicles, have made an exciting announcement today. The two companies have formally agreed to merge through a British Columbia statutory plan of arrangement, marking a significant move that's set to reshape the landscape of electric commercial trucks.
The alignment of both companies' Boards of Directors on this strategic decision underscores the tremendous potential that lies ahead in the dynamic realm of commercial electric trucks. This merger aims to not only seize the momentum of the growing market but also combine the unique strengths of ElectraMeccanica and Tevva to drive innovation and transformation in the industry.
Tevva's recent launch of its 7.5-ton battery-electric truck for urban delivery fleets has generated substantial interest within the commercial space. This is a particularly pivotal area as it addresses the critical need for environmentally friendly solutions in densely populated urban centers. Tevva's innovative approach includes a bespoke, commercial-grade electric battery system, setting the stage for its upcoming product portfolio featuring a proprietary hydrogen range-extender technology. This forward-looking approach positions Tevva as a pioneer in providing a sustainable and versatile dual-energy solution for commercial transportation.
The strategic combination of Tevva's operational base, which boasts an impressive 110,000-square-foot EV manufacturing facility in Tilbury, UK, with ElectraMeccanica's state-of-the-art 235,000-square-foot facility in Mesa, Arizona, is a visionary step that offers a platform for exponential growth. With the capability to cater to the UK, European, and US markets, the merged entity is poised to meet the increasing demand for electric commercial trucks on a global scale.
David Roberts, who presently serves as a Director of Tevva and is anticipated to assume the role of Executive Chairman upon the merger's completion, highlighted the company's journey, stating, "Over the past decade, Tevva has dedicated its efforts to crafting a lineup of zero-emission commercial vehicles that have garnered significant interest from customers. Merging with ElectraMeccanica is a strategic move that promises to accelerate our expansion and amplify our presence in this rapidly evolving market. The impressive management team at ElectraMeccanica and their assets are well aligned with our goals, making this a highly synergistic partnership."
Susan Docherty, the Chief Executive Officer of ElectraMeccanica, shared her enthusiasm for the merger, emphasizing the strategic advantage it presents. "Partnering with Tevva at this juncture aligns perfectly with our vision to respond to the surging demand for dependable and cost-effective electric trucks within the commercial fleet sector. The convergence of our operations, values, and mission gives us the confidence that we can create substantial value for our shareholders. Tevva's robust presence in the UK and European markets, coupled with our manufacturing prowess and seasoned executive team, positions us for unprecedented growth."
Steven Sanders, Chairman of the ElectraMeccanica Board of Directors, further underlined the strategic rationale, stating, "The collaboration with Tevva presents an exclusive opportunity for our shareholders to partake in the accelerated growth prospects of the unified company. This strategic move naturally extends and leverages ElectraMeccanica's existing assets and strengths."
Tevva's Unwavering Focus on the Commercial Truck Market
Since its inception in 2013, Tevva has been resolutely committed to pioneering innovative, zero-emission solutions tailored for the urban delivery market. The strategic focus on this sector stems from its rapid growth and outsized environmental impact. With a considerable portion of greenhouse gas emissions attributed to commercial vehicles, particularly those operating in urban settings, Tevva has positioned itself as a vanguard against this detrimental trend. Medium- and heavy-duty vehicles contribute significantly to the transportation sector's CO2 emissions, accounting for 22%. Tevva's products, having undergone rigorous real-world testing, provide a tangible solution that not only mitigates emissions but also offers a compelling return on investment for fleet operators.
Detailed Aspects of the Proposed Transaction
The proposed merger is the outcome of an extensive evaluation process initiated by ElectraMeccanica's Board of Directors to optimize the company's assets and drive sustained shareholder value, all while prudently managing potential risks. Following a comprehensive analysis, the Strategic Committee of ElectraMeccanica's Board, comprised of Steven Sanders (Chairman), Mike Richardson (Vice Chairman), and Dietmar Ostermann (Director), put forward a unanimous and formal recommendation to merge with Tevva, setting the wheels in motion for the proposed transaction.
Upon completion of the merger, ElectraMeccanica shareholders will hold a 23.5% stake in the combined entity, while Tevva shareholders will retain a 76.5% interest on a fully diluted basis. Financially, the merged entity anticipates maintaining a cash balance ranging between $70 million and $80 million, with a debt load of approximately $26 million. The amalgamated company is projected to be christened Tevva, Inc., and the plan is for its shares to be listed and traded on The Nasdaq Capital Market under the symbol TVVA, contingent on requisite Nasdaq approvals.
The merger promises to unlock Tevva's swift penetration into the US market, bolstered by the complementary assets, expertise, and resources of ElectraMeccanica. Additionally, material cost savings are expected to accrue over the long term, while approximately $5 million in annual cost savings are projected to be realized by the close of 2024.
The combined Board of Directors is set to comprise nine members, featuring a blend of five directors from Tevva and four directors from ElectraMeccanica, a majority of whom will be recognized as independent directors. The senior leadership team of the merged entity will reflect a synthesis of top talent and experience from both organizations. Following the merger's finalization, Susan E. Docherty is slated to take on the role of Chief Executive Officer. Ms. Docherty, who joined ElectraMeccanica in December 2022 as CEO, boasts an impressive 40-year track record in senior leadership positions, including a tenure of three decades at General Motors, where she held various high-ranking roles in international automotive operations. As an additional strategic move, David Roberts, a Tevva Board Director for three years, is expected to assume the position of Executive Chairman for the combined company. Mr. Roberts is renowned for his expertise in industrial, transportation, and clean energy sectors, and his leadership experience spans notable roles at Chrysler and Aston Martin Lagonda.
The Proposed Transaction Mechanics
The proposed merger will be executed implemented by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia). In this Under the terms of the Arrangement, a new British Columbia corporation named "Tevva, Inc." will be formed to manage and consolidate the combined operations of ElectraMeccanica and Tevva. This newly formed company will acquire all of the outstanding shares of both ElectraMeccanica and Tevva, resulting in a seamless integration.
As part of the merger announcement, ElectraMeccanica's Board has granted provisional approval for a $6 million credit facility to Tevva, subject to certain conditions. This credit facility, accessible until the merger's conclusion, aims to provide Tevva with additional working capital, enabling the acceleration of commercial vehicle deliveries to fleet customers.
