Following the announcement of a merger, Roth MKM analyst Craig Irwin has lowered his price target on Electra Meccanica Vehicles (Electra Meccanica Vehicles Stock Quote, Chart, News, Analysts, Financials NASDAQ:SOLO).
On January 11, SOLO announced it would merge with rival electric vehicle manufacturer Xos, Inc.
Susan Docherty, Chief Executive Officer of ElectraMeccanica, added, “In my last shareholder update, I stated that nothing was a higher priority than finding the right partner for us to create and re-accelerate shareholder value. We believe the proposed combination with Xos would achieve our management team’s objective to generate revenues, achieve credible long-term profitability and improve shareholder value. Today, we couldn’t be more pleased with the proposed combination with Xos, given its clear track record as an EV OEM with industry-leading gross margins; its proven ability to service demanding, large-fleet customers like FedEx Ground, UPS and Loomis; and its talented, disciplined management team.
The analyst summarized the development.
“ElectraMeccanica and Xos, Inc. announced a merger agreement to leverage the combined strengths of each company,” he wrote. “SOLO and Xos announced an agreement where Xos will acquire all outstanding shares of SOLO in an all-stock transaction. The merger is expected to close in 1H24, pending shareholder approval, and following completion of the deal, SOLO shareholders will own around 21% of the combined company. Xos, a manufacturer of electric trucks, has delivered over 600 units since 2020, including 110 delivered in 4Q23, and has a Tennessee facility with a peak capacity of 5k units/year. The combined Board of Directors will include six designated by Xos, and three by SOLO”
In a research update to clients January 12, Irwin maintained his “Neutral” rating on SOLO but cut his price target from $0.50 to $0.40.
“The lower target reflects anticipated cash of $48m at the closing of the merger agreement, where downside support should come from the cash on the balance sheet,” the analyst explained.
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