These special purpose acquisition companies are merging with manufacturers that are driving the future of the automotive industry.
Shares of Hennessy Capital Acquisition (NASDAQ:HCAC), Trine Acquisition (NYSE:TRNE), and CIIG Merger (NASDAQ:CIIC) are all surging higher today. The special purpose acquisition companies (SPACs) are getting closer to bringing their acquisition targets public. As of 11:30 a.m. EST, shares are moving as follows:
- Hennessy Capital up 36%;
- Trine Acquisition up 17%;
- and CIIG Merger up 13%.
Hennessy is combining with specialty electric-vehicle (EV) maker Canoo, and Trine is merging with 3D printing technology company Desktop Metal. Both expect their mergers to be completed this month. CIIG plans its transaction for electric bus and van maker Arrival to close in the first quarter of 2021.
Hennessy expects the newly public company to be trading on the Nasdaq before the end of the month under the new symbol CNOO. Canoo’s “skateboard platform” will enable it to maximize cabin space, streamline production, and satisfy various customer needs. It expects to have its first vehicles available in 2022 aimed at urban markets.
Arrival plans to begin production of its buses in the fourth quarter of 2021, followed by two sizes of commercial vans in the second half of 2022. Its microfactory approach — where factories are quickly built near customer bases — will allow it to maintain low capital costs and focus on targeted markets. CIIG shares got a recent boost from CNBC’s Jim Cramer when he spoke positively of Arrival and its business plan.
Arrival also plans to keep costs down by using a lightweight composite material for its body panels. Desktop Metal, which was founded in 2015, is the maker of 3D printers that produce both metal and composite fiber parts. The company’s equipment will be utilized for mass production and is already being used by automotive customers.
Desktop Metal believes the additive manufacturing industry will grow from $12 billion to $146 billion this decade as it moves into mass production uses. Arrival says the van and bus EV market it is targeting has $430 billion in market potential. Canoo feels its specialty EVs will be attractive for several markets, including a potentially $50 billion last-mile delivery market.
All three prospective businesses have a lot of potential. But there will also be much competition and a long road to mass volume adoption. Investors interested in taking part should allocate only a speculative portion of funds and be able to follow the progress in these businesses to decide whether it makes sense to add more along the way.
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