Last week, rumours circulated that EV maker Polestar were in merger talks with SPAC company Gores Guggenheim Inc (NASDAQ: GGPI). According to a Bloomberg article, the combined company valuation could be upwards of $25 Billion. The rumoured talks could still fall out as no clear deal has been made between the two parties. Nevertheless, speculators jumped on GGPI stock which gained 6% last week. The Volvo backed EV company, generated $645 million in revenue in 2020. In addition, Polestar plans to begin production of their Polestar 3 SUV model next year. This article will breakdown everything investors need to know about the GGPI and Polestar merger.
Key details surrounding rumoured Polestar merger
SPAC Gores Guggenheim Inc (NASDAQ: GGPI) noted in their IPO they look to target a company which may operate in multiple key industries. These include the technology sector, telecommunications and business services. The SPAC raised $800 Million on IPO which included a $50 Million Closing of Over-Allotment. The rumoured valuation of the combined company is estimated at $25 Billion, making it potentially one of the largest SPAC mergers in 2021.
Some investors are now comparing the rumoured talks with the current SPAC merger between Churchill Capital Corp IV (NYSE: CCIV) and Lucid Motors. The CCIV stock has gained 80% over the past 6 months, primarily due to the bullish consensus from retail investors. The rumoured talks with Polestar may just open another opportunity for investors to get in early on a high growth EV SPAC.
Why the talks between Gores Guggenheim and Polestar are a big deal
The rumoured merger is another example of a high growth EV company utilising a SPAC pathway to go public. Furthermore, the majority of the SPAC offerings for EV companies are currently not generating any revenue. However, Polestar generated a total revenue of MSEK 5,540 million ($645 million) in revenue in 2020 based on a Volvo Car group annual report. This is clear advantage for Polestar investors if compared to the Lucid Motors merger, who is yet to begin deliveries.
If the Polestar merger is announced, the transaction will provide the company with capital for further expansion into the EV sector. In the case of Lucid Motors, the company expects to receive $4.4 billion in net proceeds from their merger which is expected to close this month. CCIV initially raised $1.8 Billion at IPO which is triple the initial offering of Gores Guggenheim Inc (NASDAQ: GGPI).
Summarising the rumoured Polestar merger
In summary, the rumoured merger looks an exciting possibility if talks go through. The $25 Billion evaluation and the success of similar SPAC opportunities such as CCIV are encouraging signs for investors. We will continue to update our viewers on the Polestar 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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