Take a trip across the pond and onto the race track. There, you might find McLaren, the maker of world-renowned super cars. Despite its long history, McLaren has not been immune from the novel coronavirus. And because of this, a McLaren SPAC merger could be on the way. What do you need to know right now?
For nearly three decades, McLaren has captivated vehicle enthusiasts with its so-called super cars. Loosely, these cars are street-legal, high-performance luxury vehicles. They look nice, and they drive powerfully. In addition to its 720S super car, it also manufactures vehicles under the ultimate and sports categories.
Although McLaren is no stranger to success in the automotive world, this year has not been kind. McLaren saw sales fall more than 60%, let go of a quarter of its staff, sought emergency funding and saw losses increase to 312.9 million British pounds. As CEO Mike Flewitt put it, the industry did not have the right liquidity to survive a pandemic. Now, Flewitt thinks it is time for McLaren to make a radical change.
For investors, that means a McLaren SPAC merger, and a chance to invest in the captivating super-car industry, could be right around the corner. According to a report in the Financial Times, McLaren has discussed a SPAC merger with at least one blank-check company. Flewitt has also confirmed the company is hoping to raise as much as 500 million British pounds through such a deal.
What does this really mean for investors?
What a McLaren SPAC Merger Could Mean
Importantly, investors need to recognize that there is no guarantee the company will raise funds via a SPAC merger. However, it is intriguing that McLaren is at least considering the idea. It would also be unsurprising. A simply amazing number of companies have chosen to go public via blank-check firms this year. Spurred on by the pandemic, and a large investor appetite for new offerings, this has been the year of the SPAC. However, of all the automakers to debut, nearly all of them have been electric.
Just think about it. This year brought Nikola (NASDAQ:NKLA), Fisker (NYSE:FSR), Lordstown Motors (NASDAQ:RIDE) and many more. These next few months will bring even more, including British startup Arrival. All focus, in some way or another, on electrifying transportation.
What about McLaren? Right now, the company is focused on the traditional world of internal combustion engine vehicles. As investors consider a potential McLaren SPAC merger, this is also something to keep in mind. Although the automaker is making progress on a hybrid PI model, and eventually wants to hybridize its entire lineup. However, Flewitt says the all-electric model does not currently work in the realm of super cars.
Keep the idea of a McLaren SPAC merger in mind. If one comes, it will be interesting to see how investors respond to the traditional automaker. Perhaps the appeal of super cars will be enough to overcome its cash problems.
On the date of publication, Sarah Sith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.