Tuesday 23 February 2021

US-based electric Class 5 to Class 8 commercial vehicle maker Xos, Inc and special purpose acquisition company NextGen Acquisition Corp. (NASDAQ: NGAC) have entered into a definitive business combination agreement that will result in Xos becoming a publicly listed company, the companies said.

The combined company is expected to be traded on The NASDAQ Stock Market under "XOS."
Xos developed its vehicles to meet the demands and extended life cycles of last-mile, on-highway and vocational vehicles.

Xos believes it is well positioned to capitalize on the electrification of the USD 100bn total addressable market for medium- and heavy-duty last-mile commercial electric vehicles.

The company's more than 6,000-unit backlog of contracted and optional orders underscores robust market opportunities for Xos' vehicle products.

Demand in the last-mile commercial EV market is expected to grow at a 35% CAGR through 2040 as electric vehicles replace traditional fossil fuel vehicles, driven by new emissions standards, continued growth of e-commerce and the relocation of fulfillment centers to areas closer to consumers.

Xos' trucks are powered by its proprietary technology, developed to meet the needs of commercial fleets, and designed to achieve a TCO that is lower than traditional fossil fuel vehicles and other electric vehicle alternatives.

The company offers Fleet-as-a-Service, a bundled package that provides vehicle ownership services to fleet operators for a fixed monthly fee, in coordination with partners such as DLL Group (financing services) and Dickinson Fleet Services (vehicle maintenance).

The Fleet-as-a-Service package aggregates otherwise fragmented fleet service offerings and is projected to significantly increase Xos' lifetime revenue per vehicle.

In addition to Dakota Semler and Giordano Sordoni, Xos will continue to be led by its existing management team including chief technology officer, Robert Ferber, and chief financial officer, Kingsley Afemikhe.

The business combination values the combined company at a USD2.0 bn pro forma equity value, at a price of USD 10.00 per NextGen share and assuming no redemptions by NextGen shareholders.

The transaction will provide USD 575m of gross proceeds to the company, assuming no redemptions, including a USD 220m oversubscribed and fully committed common stock PIPE at USD 10.00 per share anchored by Janus Henderson Investors, as well as a consortium of truck dealers led by Thompson Truck Centers.

The boards of directors of both Xos and NextGen have each unanimously approved the proposed business combination, which is expected to be completed in 2Q21.

BofA Securities is serving as exclusive financial advisor to Xos, and Cooley LLP is serving as legal advisor to Xos. Goldman Sachs and Co. LLC is serving as exclusive financial advisor and lead capital markets advisor to NextGen and as sole placement agent for the PIPE transaction. Rothschild and Co is acting as additional financial advisor to NextGen. Credit Suisse LLC is serving as additional capital markets advisor to NextGen.

Skadden, Arps, Slate, Meagher and Flom LLP is serving as legal advisor to NextGen.