Tuscan Holdings (THCB) closes in on merger target Microvast

In early February, SPAC company Tuscan Holdings (NASDAQ:THCB) announced their intentions to merge with Lithium battery manufacturer Microvast. The highly anticipated merger has a post-transaction equity value of approximately $3 billion. The transaction will see the combined company trade on the NASDAQ under the ticker symbol MVST. The stock has outperformed over the past month, now up 22%. As THCB close in on their merger target, this article will breakdown everything investors need to know.

Key details surrounding THCB merger

  • The merger will fund the combined company $822 Million in gross cash proceeds.
  • The shareholder vote is likely to be held on the 21st of July which is one of the final steps of the transaction. Only stockholders who held Tuscan shares prior to June 21, 2021 will be eligible to vote at the Special Meeting.
  • The merger target Microvast, is a global leader in providing next generation battery technologies in Electric vehicles. This sub market industry has an addressable market of $30 Billion. The batteries are now operating in 30,000 vehicles across 19 different countries.

“The Microvast team has not only developed cutting-edge battery technology that is highly attractive to its suite of market-leading customers and partners, generating over $100 million in 2020 revenue, but also operates a vertically integrated production process for its battery solutions that is unique in the industry, enabling both enhanced customer service and the opportunity to achieve excellent margins.” Ahmed Fattouh, CEO of InterPrivate Capital

What investors need to know about Microvast

Firstly, the benefit of a SPAC merger is the combined company will raise capital from PIPE investors to fund their future expansion strategies. Microvast plan to utilise the $800 Million cash influx for three main objectives. These are manufacturing facility buildout in US and Europe, Fulfillment of current customer demand and Debt repayment. Investors are also excited about the visibility of revenue for the company. Microvast’s current partnerships equate to over $1.5 Billion in contracted revenue through 2027.

Microvast revenue forecasted to reach $6.8 billion by 2030

The company generated $100 Million in the fiscal year of 2020 and expects this to double in 2021. In February, Microvast released an investor presentation which highlighted its revenue forecasts over the next 5 years. The company expects to generate $230 Million in 2021 and $448 Million by 2022. We can see a pattern of strong revenue inclination, which is likely a driving factor in the current bullish sentiment for the stock. Microvast also included a long term forecast, with 2030 revenue expected to be in the ball park of $6.8 Billion.

THCB merger

What is driving the strong revenue outlook?

The 2030 revenue forecast is split into 3 main revenue driving segments. These are Commercial Vehicles, Battery Components and Energy Storage Solutions. Some of the current customer partnerships include the likes of Porsche and Oshkosh. Microvast is also focusing on how its technology can also be applied to high-margin applications in other high-growth markets. These include Consumer electronics, Energy storage solutions and passenger vehicles.

Summary of the THCB merger

In summary, the THCB merger looks to provide an exciting opportunity for investors to enter into the EV battery space. The strong revenue outlook and the $800 Million boost in cash will provide Microvast the funding needed to address manufacturing, demand of its technology and to reduce the companies debt. It is worth noting that we can also expect some volatility as we approach the 21st of July. We have seen many other SPAC companies struggle to maintain stock sentiment post merger.

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.

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