Xos Inc (NASDAQ:XOS) shares rallied as much as 21% on Thursday after agreeing to acquire all issued and outstanding shares of ElectraMeccanica (NASDAQ:SOLO) in an all-stock transaction that will give ElectraMeccanica (SOLO) shareholders ~21% of Xos (XOS). The merger has already been unanimously approved by both boards.
Shares of ElectraMeccanica were down 12%.
By merging with ElectraMeccanica (SOLO), which designs and assembles electric vehicles, Xos (XOS) gains access to ElectraMeccanica’s (SOLO) $48.5M cash hoard which will help fund the expansion of Xos’s (XOS) fleet of zero-emission, medium-duty electric trucks.
The expansion comes at an opportune time for Xos (XOS) as California recently contracted with Xos (XOS) to be a supplier of EV stepvans.
The merger was initiated by ElectraMeccanica’s (SOLO) board which ultimately settled on Xos (XOS) based on the company’s management team, growth prospects, and dominant position in the EV commercial truck industry which includes customers like FedEx (FDX), UPS (UPS), and Penske (PAG).
The combined board will consist of nine directors with six from Xos (XOS) — including the company’s two co-founders — and three from ElectraMeccanica (SOLO).
The transaction is expected to close in the first half of 2024.