H-D in LiveWire SPAC Deal with Private Equity and KYMCO
Harley-Davidson is not allowing the fact that recent months have seen the investor community cool on the use of Special Purpose Acquisition Company (SPAC) - as a stock listing alternate to the classic IPO - to dissuade them from an audacious plan to float 26% ownership of LiveWire to raise some $545m capital for the ongoing development of its electric vehicle products.
Harley will be left with 74% ownership of the newly floated LiveWire subsidiary. The investors (17%) and founders (4%) of a SPAC called AEA Investors and Bridges Fund Management (ABIC) will own a combined 21% (through certain noted Private Equity firm AEA Investors' executives) and Taiwanese motorcycle and scooter maker KYMCO owning a 4% stake in what Harley Chairman, CEO and President Jochen Zeitz is describing as "the first publicly traded EV motorcycle company in the US."
"The transaction will be financed by $400m cash pre-raised and held in trust by ABIC, a $100m investment from Harley-Davidson, and a $100m investment from KYMCO (through a PIPE - private investment in public equity).
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| Launched in summer of 2021, 'LiveWire One' is a tech-rich and more reasonably priced Mk II LiveWire (approx. $20k) that did much to reboot the stand-alone LiveWire brand against a previously unrealistic $30k price-point for the first 'More Roads' strategic plan's iteration of Harley's entry into the electric vehicle market. |
"The combined company is expected to have an enterprise value of approximately $1.77bn and post-money equity value of approximately $2.31bn at closing.
"Jochen Zeitz will be Chairman and serve as acting CEO of LiveWire for up to two years following completion of the transaction; Ryan Morrissey will serve as President of LiveWire. LiveWire's Board of Directors will include independent directors in addition to representation from Harley-Davidson and ABIC.
"The net cash proceeds will be used to fund LiveWire's strategic plan to accelerate its go-to-market strategy, invest in new product development and enhance its global manufacturing and distribution capabilities.
"As the majority shareholder in LiveWire following the transaction, Harley-Davidson will continue to consolidate LiveWire's results of operations for GAAP financial reporting purposes. LiveWire will be reported as a separate segment within Harley-Davidson's financials with GAAP disclosures recognizing amounts attributable to the non-controlling interests.
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| Harley Chairman, CEO and President Jochen Zeitz will additionally be Chairman and acting CEO of LiveWire (NYSE Ticker Symbol "LVW"), with LiveWire's results consolidated into Harley's fiscals as a separate segment. |
"The transaction, which has been approved by the boards of directors of both Harley-Davidson and ABIC, is expected to close in the first half of 2022, and is subject to the approval of ABIC shareholders and other customary closing conditions."
LiveWire will also include STACYC, the all-electric balance bikes for kids. The common stock is expected to be listed on the New York Stock Exchange under the symbol "LVW". J.P. Morgan Securities LLC is serving as financial advisor to Harley-Davidson.
Jochen Zeitz is quoted as saying that this announcement "is a historic milestone with LiveWire set to become the first publicly traded EV motorcycle company in the U.S. By building on Harley-Davidson's 118-year lineage, LiveWire's mission is to be the most desirable electric motorcycle brand in the world, leading the electrification of the sport.
"This transaction will give LiveWire the freedom to fund new product development and accelerate its go-to-market model. LiveWire will be able to operate as an agile and innovative public company while benefitting from the at-scale manufacturing and distribution capabilities of its strategic partners, Harley-Davidson and KYMCO."
John Garcia, Chairman and Co-CEO of AEA-Bridges Impact Corp, is quoted as saying: "We are at the confluence of two seminal shifts impacting the industry - vehicle electrification and sustainability. LiveWire is well positioned to become the premier sustainable electric motorcycle brand and redefine the industry by leveraging the manufacturing and distribution expertise of Harley-Davidson and KYMCO. We're excited to partner with Harley-Davidson and the LiveWire team to help define the future of electric motorcycles as the industry continues its rapid transformation."
Harley's statement concludes by stating: "Together, Harley-Davidson, ABIC and KYMCO believe in the future of LiveWire as a dedicated electric brand with the ability to lead, grow and revolutionize the electric motorcycle industry and beyond."
www.LiveWire.com