Polestar agrees $20bn SPAC deal

December 2021 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

December 2021 Issue

Electric car manufacturer Polestar has agreed to go public by merging with a US-listed blank-cheque firm backed by billionaire Alec Gores and investment bank Guggenheim Partners at an enterprise value of $20bn.

The deal is the largest special purpose acquisition company (SPAC) merger in the all-electric vehicle (EV) sector since Lucid Motors struck a $24bn deal with Michael Klein’s Churchill Capital IV Corp. in February. It is expected to close in the first half of 2022, subject to approval by Gores Guggenheim’s stockholders and other customary closing conditions. Current equity holders of Polestar, who will roll their entire interest in the combined company, will retain about 94 percent ownership in the company.

Upon closing, the combined company will be held by a new public company that will be named Polestar Automotive Holding UK Limited, and listed on the Nasdaq. The transaction includes approximately $800m of cash from Gores Guggenheim, Inc.’s trust account and $250m in cash from private investment in public equity (PIPE) financing.

The company will be headquartered in Gothenburg, Sweden, and its vehicles are currently available and on the road in 14 global markets across Europe, North America and China. In 2021, Polestar announced plans to expand into eight additional new markets in Europe, the Middle East and Asia Pacific. Polestar cars are currently manufactured in two facilities in China. The company delivered about 10,000 vehicles globally in 2020 and expects to sell about 290,000 per year by 2025. Polestar expects to generate $1.6bn in revenue in 2021 and around $3bn in 2022.

“This is a really exciting time for Polestar,” said Thomas Ingenlath, chief executive of Polestar. “With two award-winning cars on the road today in 14 active markets across three continents, we seek to expand to 30 markets by 2023. We are thrilled about the targeted addition of three new premium electric cars to our line-up by 2024, starting with our first SUV expected in 2022.

“In Alec and the Gores Guggenheim team, we have found a partner with an impressive track record of bringing leading companies to the public markets,” he continued. “The proposed business combination and listing position Polestar as a financially strong, future proof, global electric car company. It will enable us to accelerate our growth, strategy and most importantly, our mission towards sustainable mobility.”

“Polestar is a stand-out company in the EV space – a design-led, sports-performance oriented electric OEM focused on industry-leading sustainability solutions,” said Alec Gores, chairman and chief executive of The Gores Group and chairman of Gores Guggenheim. “The Company is truly differentiated from others given its premier vehicles, attractive financial profile, strong track record of performance, and the fact that it already has cars on the road across the globe.

“I had the privilege of seeing the line-up of upcoming models, and the cars represent best-in-class innovation and industry-leading design that set the brand apart. Driven by an incredible leadership team with Thomas at the helm, Polestar is well-positioned to capitalize on this exciting and dynamic time for car manufacturers,” he added.

Polestar raised $550m in external funding in April and in June announced plans to build Polestar 3 electric sport utility vehicles at Volvo’s US plant in South Carolina in 2022.

Volvo plans to make additional equity investments in Polestar of up to $600m and is expected to hold about 50 percent of the combined company going forward. Founded in 2017 by Volvo and Zhejiang Geely Holding, Polestar is a global pure play, premium electric performance vehicle manufacturer.

The company’s listing plan comes as automakers shift their focus to environment-friendly vehicles, amid rising pressure from lawmakers and investors concerned about climate change.

Richard Summerfield