Exro Technologies Inc. (TSX:EXRO) agreed to acquire SEA Electric LLC for approximately $300 million on January 29, 2024. As per the terms, the combined company will continue to operate under the name Exro Technologies Inc. and trade on the Toronto Stock Exchange under the ticker symbol "EXRO". As a part of consideration, Exro will issue, based on Exro's weighted average common share price over the 10 trading days ending January 26, 2024, of $0.7680 per share, a combination of common shares and non-voting convertible preferred shares to SEA stockholders. Pursuant to the Merger Agreement, SEA stockholders will receive approximately 153.8 million Exro Common Shares and 168.7 million Exro Convertible Shares, on a non-diluted basis and excluding existing SEA shares held by Exro, resulting in total implied consideration issued to SEA stockholders of approximately $248 million in aggregate, based on the Reference VWAP. In addition, Exro will assume approximately $46 million in SEA net debt as part of the Transaction. The Exro Convertible Shares will be convertible into Exro Common Shares on a one-for-one basis without payment of any additional consideration and upon the satisfaction of certain conditions. The transaction is subject to Exro Technologies Inc. shareholders approval, receipt of all necessary regulatory and stock exchange approvals and satisfaction of customary closing conditions and. Board of directors of SEA Electric LLC and Exro Technologies Inc. unanimously approved the deal. Transaction has received the requisite approvals from SEA stockholders. Upon completion of the Transaction, Sue Ozdemir will remain as Chief Executive Officer, Tony Fairweather will join Exro as the Chief Product Officer, and Darrell Bishop will become Chief Financial Officer. The board of directors of the Combined Company will consist of up to nine members with Rod Copes serving as Chair and the remaining directors comprised of representatives from both Exro's and SEA's current boards of directors. A termination fee of approximately $11.4 million is payable by Exro Technologies Inc. to SEA Electric LLC if the Merger Agreement is terminated in certain circumstances, including if Exro Technologies Inc. enters into a superior proposal, and Exro Technologies Inc. is entitled to a reverse termination fee of approximately $11.4 million from SEA Electric LLC if the Merger Agreement is terminated in certain circumstances. Closing of the Transaction is expected to occur late in the first quarter or early in the second quarter of 2024. National Bank Financial Inc. acted as a financial advisor and fairness opinion provider and, Neville J. McClure of Stikeman Elliott LLP and Jason Brenkert of Dorsey and Whitney LLP acted as a legal advisor to Exro Technologies Inc. . Canaccord Genuity Corp. and Eight Capital acted as a financial advisor to SEA Electric LLC and, Gibson, John T. Gaffney and Michelle M. Gourley of Dunn and Crutcher LLP and Blake, Michael Gans and Jacob Gofman of Cassels and Graydon LLP acted as a legal advisor to SEA Electric LLC.
As of February 16, 2024 Exro Technologies Inc. closed its previously announced bought deal private placement offering of $30 million. The net proceeds from the Offering will be held in escrow pursuant to the terms of the Subscription Receipt Agreement to be released on closing of the Transaction and are intended to be used by Exro to support the business plan of the Combined Company, including but not limited to production, capital expenditures, working capital requirements, and normal course corporate and operating needs.
As of April 4, 2024 Exro Technologies shareholder and stockholder approved the proposed merger. The transaction is expected to close on April, 5 2024.