Electric big rigs are driving premarket moves in NextGen Acquisition (NASDAQ:NGAC) stock on Monday morning after the blank-check company confirmed its merger with Xos. That firm is a leading original equipment manufacturer (OEM) in the $100 billion medium- and heavy-duty last-mile commercial EV market. NGAC stock was up 4.55% at 7:30 a.m. Eastern.
NextGen raised $350 million in its October 2020 initial public offering. The special purpose acquisition company (SPAC) was eyeing targets in the industrial and healthcare sectors, according to its initial disclosure materials. The co-founders of NextGen are George Mattson and Gregory Summe, both of whom have long histories in the investment field and have worked for Goldman Sachs (NYSE:GS).
The deal values the combined entity at $2 billion. To support the transaction, the special purpose acquisition company will raise $220 million from investors including Janus Henderson Group, Bloomberg reported. The deal will provide the company with $575 million in gross proceeds.
Several electric vehicle manufacturers have gone the SPAC route to raise capital in the last 12 months. Electric truck-maker Lion Electric said in November it would go public through merger with Northern Genesis Acquisition (NYSE:NGA). Meanwhile, reports that consumer EV maker Lucid Motors will soon announce a tie-in with Churchill Capital IV (NYSE:CCIV) has fueled a 200%-plus gain in CCIV stock in the past month
NGAC Stock Gets Big Book of Business
The deal comes as the new administration in Washington is going all-in on EVs. Investors are betting that electric vehicles will benefit from President Joe Biden’s proposed $1.7 billion green energy infrastructure plan, as well as his “Build Back Better” economic policy that focuses on clean energy and manufacturing, providing a boost to U.S. electric vehicle stocks. Biden recently issued an executive order calling for an all-electric federal vehicle fleet.
Unlike other EV-SPAC deals, investors in NGAC stock will be hitching their trailers to a company that is actually manufacturing equipment and has a growing back book of business. Xos vehicles have been deployed in field operations since 2019, with a customer base that includes United Parcel Service (NYSE:UPS) and Loomis.
Added to its reported 6,000-back orders is a deal announced last week, a partnership with Thompson Truck Centers, which over the next three years might order up to 1,100 electric trucks. Xos (formerly Thor Trucks) started from a fully electric semi called the ET-One, but then switched to Class 6 vehicles, according to Inside EVs.
Dakota Semler, Xos’ co-founder and CEO, said in an interview that the company has other distribution partnerships in the works. States like California, which are phasing out cars that produce emissions, will help increase demand for commercial electric vehicles like Xos, he said.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.
