Shares of blank-check company Tuscan Holdings (NASDAQ:THCB) surged as much as 60% in pre-marketing trading after an announcement the special purpose acquisition company (SPAC) would merge with electric vehicle battery maker Microvast. THCB stock came public in March 2019, in a $276 million initial public offering (IPO).
The Microvast SPAC merger will create a combined company that will be valued at $3 billion, according to a Tuscan Holdings press release. In 2017, CITIC Securities, a Chinese state-owned firm, led a $400 million private funding round in the firm.
Microvast makes batteries for public transportation, including taxis and buses, as well as for big transportation equipment, like port movers and mining vehicles. The U.S. Advanced Battery Consortium last year awarded the Houston-based company a contract to develop low-cost and fast-charge batteries for electric vehicle applications.
Microvast SPAC Rides Record Trend
News of Tuscan’s finding a merger partner comes as SPACs completed nearly $26 billion of share sales in January, more than the previous monthly record set in October, according to data compiled by Bloomberg. More than 200 companies completed IPOs in January, and the deal surge comes as soaring markets trigger bubble fears among some investors, the news service reported earlier on Monday.
A number of EV companies have taken advantage of the new trend. Truck manufacturer Nikola (NASDAQ:NKLA), battery play QuantumScape (NYSE:QS), and van/truck developer Canoo (NASDAQ:GOEV) all closed SPAC mergers in 2020. Other EV plays joined them.
InterPrivate, one of the lead investors in an additional $540 million investment piggybacked on the merger previously managed another SPAC, InterPrivate Acquisition (NYSE:IPV), which inked a merger pact with lidar maker Aeva late last year. That company recently announced a partnership with TuSimple to supply LiDAR technology on the firm’s self-driving trucks.
What to Do Here?
To be sure, this morning’s surge in THCB stock puts the shares at a level that may not make sense for some investors. But history may be on your side. Recent results show that EV SPAC stocks often rally into and out of the merger close date, even if those rallies fundamentally don’t seem to make sense.
Do your research, watch for the dips and then make your move.
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.