Calgary-based electric vehicle (EV) tech firm Exro has entered into a $332-million CAD agreement to acquire California-based SEA Electric.
“Exro provides the resources, capabilities, and automotive systems that will ensure the successful execution of these important contracts[…]”
-Tony Fairweather, SEA founder and CEO
The deal will see Exro’s energy-efficiency-focused offerings and SEA’s propulsion systems combine to provide an end-to-end solution, the companies said in a statement. The CEOs of both companies referred to their respective offerings as “complementary.”
“Our merger with SEA not only creates significant revenue and cost synergies, but positions Exro to amplify its growth with new partners while continuing to develop our existing relationships,” Exro CEO Sue Ozdemir said in a statement.
The transaction, which values SEA at approximately $402 million CAD, will see Exro issue approximately $332 million CAD in Exro shares to SEA stockholders, while Exro will assume approximately $62 million in SEA net debt.
Exro said that the combined company will have an asset-light business model combined with its 2024 revenue targets, providing it with “a defined path” to profitability within 12 months of closing the transaction. The transaction is expected to close by the end of Q1 2024.
Ozdemir will remain as CEO through the transaction while SEA founder and CEO Tony Fairweather will join Exro as the chief product officer. The combined company will operate under the Exro name.
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Alongside the acquisition, Exro plans to raise approximately $30 million CAD through the issuance of subscription receipts of Exro, as well as $12 million CAD in debt financing from SEA’s arrangement with a Canadian pension fund manager.
Founded in 2014, Exro says it aims to “bridge the performance-cost gap in e-mobility” through its Coil Driver offering, an adaptive EV traction inverter that prioritizes power and torque at different speeds.
Exro trades on the Toronto Stock Exchange under the symbol EXRO. Its stock price has been steadily declining since trading at $2.75 per share on Jan. 31, 2023 to $0.95 per share on Jan. 31, 2024. Its share value dropped 8.1 percent following news of the acquisition, according to MarketWatch.
SEA was founded out of Australia in 2012 but later relocated its headquarters to Torrance, California. Its propulsion system technology is aimed to control the components that electrify a vehicle. With SEA’s product, customers are able to choose one of four desired power systems and a preferred cab chassis, from vans to trucks.
Prior to the acquisition, SEA had multi-year commitments from Toyota and Volvo subsidiaries, Hino and Mack, respectively, for its propulsion system technology. The combined company will aim to deliver more than 1,000 propulsion technology systems to the clients in 2024. Exro forecasts its aggregated revenue to exceed $200 million in 2024.
“Exro provides the resources, capabilities, and automotive systems that will ensure the successful execution of these important contracts, as well as offering complementary and differentiating technology in the form of its Coil Driver and Cell Driver,” Fairweather said in a statement.
Feature image courtesy Exro via LinkedIn.
