Pivotal Investment Corporation II (NYSE: PIC) announced on Tuesday they will be holding an annual meeting on December 21 for shareholders to vote on the proposed merger with XL Fleet. The shareholder vote is one of the last steps in the lengthy merger process. In addition, both companies will merge under the one ticker, NYSE:XL. PIC has since seen a surge in the stock price, with the stock climbing to $17.58 a share. If the shareholder vote is successful we may potentially see XL trading on Wallstreet before the new year.
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PIC and XL Fleet key merger details
Initially, the PIC merger announcement made waves on Wallstreet midway through September this year. The mergers implied enterprise pro forma value is an estimated at $1 Billion. The merger will provide XL Fleets $350 million in much needed funding for international expansion. PIPE investors will receive $150 million in common stock for $10.00 a share.
- The shareholder meeting is scheduled for the 21st of December, marking one of the last steps in the mergers transaction process.
- The funds raised in this transaction ($350 million) will go towards XL’s expansion plans. This includes the development of new products and services and operational expansion internationally.
- The merger is likely to be finalised before 2021, assuming shareholders approve of the merger terms.
- Both companies will merge and will commence trading under the new stock ticker NYSE:XL.
“We are pleased to reach this significant milestone in the merger process, which brings XL Fleet one step closer to becoming a public company. Over the past several months, XL Fleet has reinforced our conviction that it will emerge as a winner in the vehicle electrification market.”Kevin Griffin, a Pivotal Director on the shareholder meeting announcement.
Why investors are bullish on XL Fleet?
Firstly, XL Fleet are not your average EV innovator. Similar to Hyliion, XL supplies electrified powertrain solutions. Customers of XL Fleet include the likes of Ford, Chevrolet, GMC, and Isuzu. According to XL Fleet, the company has thousands of XL units already on the road which have collectively driven over 130 million miles. In addition, XL Fleet’s electric drive system “was named one of TIME magazine’s best inventions of 2019”.
Financial outlook for XL Fleet
One strong positive we can take from the public listing is that the company already has their technology on the roads. We have seen numerous examples of SPAC listings with EV developers who are yet to produce a single unit for sale.According to XL, the company has “strong demand momentum with a $220 million 12-month sales pipeline”. The forecasted revenue for the fiscal year is expected at $21 million whilst 2021 is forecasted at $75 million. The financial projections are strong however are a fraction of what EV manufacturers are forecasting to turn over for 2021 and beyond.
“We believe that this transaction will enable XL Fleet to advance and accelerate the growth of our industry-leading fleet electrification business, including a rapid expansion of our product offerings. With thousands of XL-equipped vehicles already on the road today, we are excited to continue to pave the way for fleets seeking to promote sustainability while improving operational efficiency.”Chief Executive Officer Dimitri Kazarinoff
What’s next for PIC/XL Fleet investors?
With merger on the brink of finalisation, both companies are on the verge of a very exciting era of development. Assuming the shareholders vote is approved, the merged company will trade on the NYSE under the ticker XL. Investors will be able to buy XL Fleet shares directly on the equity market. Hence, posing further questions as to where the stock will go in 2021. The first few weeks after listing are the most important times to collect data and analysis on a newly listed stock. Once XL Fleet is listed, it will be interesting to see how analysts perceive XL Fleet.
As the company is in full flight, its quarterly earnings starting in 2021 will be highly speculated by investors. With a strong revenue guidance from the company, its vital management can follow through. Furthermore, investors will need to be aware of the direct competitors that are entering Wallstreet. If we compare XL Fleet to Hyliions SPAC merger, there are definitely some similarities. Both companies are offering an immediate solution via powertrains to offer to fleet companies. This solution allows for companies to slowly integrate greener tech without extreme damage to the balance sheet. As competitors, Hyliion will be one for XL Fleet investors to watch.
I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research
In conclusion, both PIC and XL Fleet are entering an exciting period of growth. The merger marks one of the many SPAC transitions we have seen, particularly in the EV industry. The merger is expected to be completed within the fiscal year assuming the vote goes to plan. From here, more data will be available for investors to judge the long term outlook for XL Fleets once the company is public. Our team will look to provide a 2021 forecast for XL Fleet stock once the company is public.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.