Detroit — Electric vehicle startup Lordstown Motors Corp. and DiamondPeak Holdings Corp. have entered into a $1.6 billion merger agreement that will result in Lordstown becoming publicly listed, the two companies said Monday.
Lordstown's merger with the special purpose acquisition company is viewed as a way to aid in the development of Lordstown’s all-electric pickup truck, the Endurance, which was unveiled in June.
“We are thrilled with the opportunity to build Lordstown Motors into a top-tier electric truck company that is highly differentiated from the competition," said Steve Burns, founder and CEO of Lordstown, in a statement.
Shares of DiamondPeak stock were up 14% Monday morning after the merger announcement.
Lordstown Motors purchased a 6.2 million-square-foot assembly plant in Lordstown, Ohio, from General Motors Co. in the fall of 2019. GM has invested $75 million in the company: $25 million in cash, the $20 million value of the plant and the equipment inside, and $30 million in operational support.
GM stopped manufacturing Chevrolet Cruzes at the plant in March 2019, more than 50 years after production first began. Lordstown Motors is working to start production of its Endurance truck there early next year. Its $52,500 truck is targeting commercial, fleet customers like utility companies and municipalities. The company said it has received more than 27,000 pre-orders for the vehicle, which is more than $1.4 billion of potential revenue.
"GM is excited about the progress LMC has made because we believe production of the Endurance pickup will help create jobs in the Lordstown community," GM spokesman Jim Cain said in a statement.
Lordstown has also received investment from institutional investors, including Fidelity Management & Research Company LLC, Wellington Management Company LLP, Federated Hermes Kaufmann Small Cap Fund, and funds and accounts managed by BlackRock.
“We have evaluated hundreds of companies for more than a year and Lordstown stood out as a differentiated, high growth company at the confluence of electric vehicles and light-duty trucks, two highly valuable areas of focus and tremendous opportunity in the automotive sector," David Hamamoto, chairman and CEO of DiamondPeak, said in a statement.
When the transaction closes, which is likely to be in the fourth quarter, the combined company will be named Lordstown Motors Corp. and is expected to remain listed on the NASDAQ and trade under the new ticker symbol “RIDE.”
The business combination values Lordstown at an implied $1.6 billion pro forma equity value, at the $10 per share PIPE price and assuming minimal redemptions by DiamondPeak stockholders.