Romeo Systems Inc, a battery maker for electric vehicles, will go public through a merger with blank check company RMG Acquisition Corp in a $1.33 billion deal, the companies said on Monday.
The deal is expected to raise $384 million for Romeo, which includes an investment of $150 million from waste hauler Republic Services and The Heritage Group, a privately owned company with interests in energy, refining, chemicals and construction.
Shares of RMG Acquisition fell 8.3% at $10.55 in morning trading.
Romeo Systems, which operates as Romeo Power Technology, will use the proceeds for capacity expansion and research and development to further develop battery system technologies for commercial vehicles, according to a statement.
After the deal closes, which is expected in the fourth quarter of 2020, the combined company will list on the New York Stock Exchange under the symbol “RMO”.
U.S. auto parts maker BorgWarner Inc owns 20% of Romeo Systems, according to the battery maker’s website. Romeo Systems also has a 40% stake in a European battery joint venture with BorgWarner.
Based in the Los Angeles area, the five-year-old company provides batteries, in partnership with supplier BorgWarner, mainly to commercial truck manufacturers in North America and Europe.
Romeo has raised $123 million in venture funding from BorgWarner, the Heritage Group and others, according to investor website PitchBook.
A SPAC is a shell company that raises money through an initial public offering to buy an operating entity, typically within two years.
SPACs have emerged as a quick route to the stock market for companies, particularly auto technology startups, and have proven popular with investors seeking to echo Tesla‘s high stock valuation.
Other EV companies with SPAC deals include Fisker, Lordstown Motors and Canoo. Electric and fuel cell vehicle startup Nikola also went public via SPAC deal earlier in 2020.
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