Swedish electric vehicle maker Polestar could begin trading in the U.S. on June 24 if its reverse merger with special purpose acquisition company (SPAC) Gores Guggenheim (NASDAQ:GGPI) is approved later today. GGPI stock is up on this news.
Shareholders of SPAC Gores Guggenheim are voting today on whether to approve the combination with Polestar that will see the Swedish electric vehicle maker begin trading under the ticker symbol “PSNY” as early as this Friday. The deal is widely expected to be approved in what is one of the most hotly anticipated SPAC deals of the year. GGPI stock is currently trading at $10.09 per share, up 8% today, but down 16% year-to-date.
What Happened
In a news release, Gores Guggenheim said it expect to close its business combination with Polestar on June 23, enabling the Swedish automaker to begin trading on the Nasdaq exchange the following day. Gores Guggenheim added that the deal should raise at least $850 million in gross proceeds. This includes cash that is currently being held in trust.
“Our listing on the Nasdaq in partnership with Gores Guggenheim will be a milestone moment for the company,” said Polestar CEO Thomas Ingenlath in the news release.
We are excited about the future of Polestar and will continue to build world-class electric cars, grow the passionate customer community and expand into even more markets around the globe.
Polestar was established in 1996 by Swedish automotive giant Volvo. Polestar is headquartered in Gothenburg, Sweden but manufactures its electric vehicles in China. The company develops its own electric cars and also runs an innovation lab for Volvo, as well as provides performance hardware upgrades and engine optimization for Volvo vehicles. Polestar has been developing electric vehicles since 2017.
Why It Matters
While it was red hot last year, the SPAC market has cooled off considerably this year amid the market downturn. In 2021, there were 613 SPAC listings on U.S. stock exchanges, raising a total of $145 billion, which was a 91% increase from the amount raised in 2020, according to data from Nasdaq. So far this year, there have only been 11 SPAC deals valued at $25 million or more completed through the end of May. At least 73 SPACs that were planning to go public this year have canceled their plans.
The downturn is due to deteriorating market conditions, as well as investors growing more risk averse amid high inflation and rising interest rates. The booming market of late 2020 and early 2021 that created ideal conditions for companies to go public has reversed course. Polestar is therefore one of the biggest and most eagerly anticipated SPAC deals in recent months. The company’s listing will provide investors with access to a major foreign electric vehicle company that is not headquartered directly in China.
What’s Next for GGPI Stock
Investors will have to wait until the end of today to find out if Gores Guggenheim shareholders approve the reverse merger with Polestar. But again, the vote is largely viewed as procedural and, barring something unexpected, should go through as planned. This paves the way for investors to grab shares of Polestar when its stock officially starts trading on the Nasdaq later this week.
On the date of publication, Joel Baglole 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.
