Motorcycle mainstay Harley-Davidson (NYSE:HOG), is enjoying a sizable uptick this morning. This comes after announcing that its electric motorcycle segment, LiveWire, will be going public via merger with special purpose acquisition company (SPAC) AEA-Bridges Impact (NYSE:IMPX). IMPX stock jumped 3% on market open as investors clamor over the news. Furthermore, pending completion of the deal, LiveWire is set to be the first publicly traded electric motorcycle company.
So, what else should investors know about this deal?
Well, LiveWire was first introduced by the legendary motorcycle company in 2019, in the form of its namesake standalone model. An attempt to appeal to a younger, more tech-centric audience, LiveWire appears to be spinning off its own innovation.
LiveWire’s initial public offering (IPO) is being financed through investments from AEA, Harley-Davidson itself and KYMCO, a Taiwanese electric scooter company. The deal presents a slew of benefits for Harley-Davidson, the least of which being to its stock price. Indeed, HOG stock is up nearly 16% on the news.
Harley-Davidson CEO Jochen Zeitz commented on the news:
“Today’s announcement is a historic milestone with LiveWire set to become the first publicly traded EV motorcycle company in the U.S. By building on Harley-Davidson’s 118-year lineage, LiveWire’s mission is to be the most desirable electric motorcycle brand in the world, leading the electrification of the sport. … This transaction will give LiveWire the freedom to fund new product development and accelerate its go-to-market model. LiveWire will be able to operate as an agile and innovative public company while benefitting from the at-scale manufacturing and distribution capabilities of its strategic partners, Harley-Davidson and KYMCO.”
What to Expect From IMPX Stock Heading Into Public Issuance Day
Electric vehicles (EVs) and SPACs continue to be a match made in heaven. LiveWire’s merger with blank-check company AEA comes on the tails of Lucid Motors’ (NASDAQ:LCID) eye-popping SPAC IPO. Indeed, SPACs have grown in popularity as a fast and relatively simple entry to public markets.
SPACs refer to publicly traded companies that exist to merge with and take public private companies. As such, AEA doesn’t functionally produce anything. This latest move will see IMPX stock converted to LiveWire’s LVW ticker. With the deal comes $400 million in financing from AEA, plus an additional $100 million each from Harley-Davidson and KYMCO.
Harley-Davidson will retain 74% ownership of the new company. However, the deal will cement LiveWire’s operational independence from the motorcycle powerhouse. Additionally, the merger will also present a variety of first-mover advantages within the EV phenomenon.
The merger will likely close in the first half of 2022. Therefore, you can be sure investors will keep their fingers on the pulse for this headline-grabbing IPO to start the new year.
On the date of publication, Shrey Dua did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
