VivoPower announces strategic merger heads of agreement with FAST at a pro-forma combined equity value of US$1.13bn

Rhea-AI Summary

VivoPower International PLC (Nasdaq: VVPR) has announced a strategic heads of agreement to merge with Future Automotive Solutions and Technologies Inc. (FAST) at a pro-forma combined equity value of US$1.13bn. The proposed all-stock merger values VivoPower equity at US$556 million (implying a share price of US$101 per VVPR share) with FAST equity valued at US$578 million. VivoPower is expected to issue 5.72 million restricted shares as consideration for FAST. Post-merger, VivoPower shareholders are expected to own 49% of the combined group. The merger is conditional upon closing of the previously announced business combination with CCTS and separate listing of Tembo. The agreement provides for a 90-day exclusivity period to reach a definitive agreement, with a target completion date of December 31, 2024.

Positive

• Proposed merger values VivoPower at US$556 million, implying a significant share price increase to US$101 per VVPR share
• Strategic merger with FAST, a hydrogen technology company, potentially expanding VivoPower's market reach and technological capabilities
• VivoPower shareholders expected to retain 49% ownership in the combined entity, maintaining substantial stake
• Potential synergies between VivoPower's existing operations and FAST's hydrogen conversion technology

Negative

• Issuance of 5.72 million new restricted shares may lead to dilution for existing VivoPower shareholders
• Merger is conditional on several factors, including the completion of the CCTS transaction and minimum net cash requirements
• Non-binding agreement carries the risk of deal falling through if definitive terms are not agreed upon
• Integration challenges and costs associated with merging two companies across different countries

Financial Analyst

The proposed merger between VivoPower and FAST represents a significant strategic move with substantial financial implications. The deal values VivoPower at $556 million, implying a share price of $101 per VVPR share—a notable premium over current market prices. This valuation suggests strong confidence in VivoPower's potential. The all-stock transaction structure, involving the issuance of 5.72 million restricted shares, indicates a focus on long-term value creation rather than immediate cash considerations.

Post-merger, VivoPower's estimated 11.2 million fully diluted shares with a $1.13 billion combined equity value could significantly enhance its market position. However, the relatively small free float of 3.3 million shares might lead to increased volatility. The $20 million minimum net cash requirement at closing is a important factor to monitor, as it could impact the deal's feasibility.

Tech Expert

The merger between VivoPower and FAST represents a strategic alignment in the rapidly evolving clean energy and transportation sectors. FAST's expertise in hydrogen technology, particularly in converting ICE vehicles to hydrogen power, complements VivoPower's existing sustainable energy solutions. This synergy could position the combined entity as a leader in the transition to hydrogen-powered vehicles, a market with significant growth potential.

The involvement of Ken Okuyama, a renowned automotive designer, adds credibility to FAST's technological capabilities. His experience with major automotive brands and pioneering work on electric vehicles like the EV1 could be invaluable in developing next-generation hydrogen vehicles. This merger could accelerate innovation in sustainable transportation, potentially disrupting traditional automotive markets and advancing the adoption of hydrogen technology.

Market Research Analyst

This merger signals a significant shift in the clean energy market landscape. By combining VivoPower's sustainable energy solutions with FAST's hydrogen technology, the new entity is poised to capitalize on the growing demand for alternative fuel vehicles. The hydrogen vehicle market, while still nascent, shows promise, especially in commercial and heavy-duty applications where battery electric vehicles face limitations.

The 49% ownership for current VivoPower shareholders in the combined entity suggests a balanced partnership, which could lead to smoother integration and shared vision. However, investors should note the conditional nature of the deal, including its dependence on the Tembo-CCTS transaction. The 90-day exclusivity period provides a reasonable timeframe for due diligence, but also introduces uncertainty. Market reaction will likely hinge on the successful completion of these interconnected deals and the combined company's ability to execute its hydrogen strategy effectively.

Proposed all stock merger values VivoPower equity at US$556 million (implying a share price of US$101 per VVPR share) with FAST equity valued at US$578 million

VivoPower expected to issue 5.72 million restricted shares at US$101 per VivoPower share as consideration for FAST

VivoPower shareholders expected to own 49% of the pro forma combined group, with affiliates and insiders agreeing to a voluntary lock up upon closing of the transaction

Post-proposed merger, VivoPower will have an estimated 11.2 million fully diluted shares, with an estimated free float of 3.3 million shares (excluding any other issues)

FAST is a Canadian headquartered hydrogen technology company pioneering advanced gas power to hydrogen power conversions and next-gen hydrogen vehicles; it has office and factory locations in Canada and Japan

Heads of agreement is non-binding but provides for an exclusivity period of 90 days for the parties to reach a definitive agreement

Proposed merger is conditional upon closing of the previously announced business combination with CCTS and separate listing of Tembo

Parties expect to establish the value of Tembo shares held by VVPR shareholders following closing of the CCTS transaction and to consider potential distribution of such value to qualifying shareholders

VivoPower’s board of directors has engaged a third party to provide a fairness opinion

LONDON, Sept. 17, 2024 (GLOBE NEWSWIRE) -- VivoPower International PLC (Nasdaq: “VVPR”) (“VivoPower”) has announced a strategic heads of agreement to merge with Future Automotive Solutions and Technologies Inc. (“FAST”) that reflects an equity valuation of $556 million for VivoPower and $578 million for FAST. The heads of agreement is exclusive for 90 days, but non-binding until such time definitive transaction documents are executed. A target completion date of 31 December 2024 has been agreed and is conditional upon, among other things, the consummation of the previously announced business combination transaction between Tembo and Cactus Acquisition Corp. 1 Limited (“CCTS”), the satisfactory completion of a third-party fairness opinion, minimum net cash at closing of $20 million as well as the fulfilment of customary regulatory and merger transaction requirements.

As contemplated in the heads of agreement, the proposed merger will involve the issuance of 5.72 million restricted new shares in VivoPower to FAST shareholders as consideration. VivoPower shareholders are expected to own 49% of the pro forma combined group upon closing of the proposed merger based on the current pro-forma fully diluted VivoPower shares on issue. The implied value of VivoPower’s current outstanding shares at the US$538 million merger equity value is approximately US$101 per share.

FAST is a Canadian headquartered hydrogen technology company that converts ICE (internal combustion engine) vehicles to run on hydrogen with offices and factory locations in Canada and Japan. FAST was co-founded and is led by one of the automotive industry's leading luminaries, Ken Okuyama. Mr. Okuyama is best known for being the chief designer of the Enzo Ferrari, whilst working at Pininfarina. He also oversaw projects including Ferrari 599 GTB Fiorano, Ferrari 456M GT, Ferrari California, Ferrari 612 Scaglietti, Ferrari Rossa (Concept car), Mitsubishi Colt CZC, Maserati Birdcage 75th, Maserati Quattroporte V and Ferrari P4/5. Mr. Okuyama previously worked for Porsche, helping design the new generation of the Porsche 911 (aka 996) as well as the Boxster. Prior to that Mr. Okuyama was a design director at Advanced Concept Center of General Motors where he directed the world’s first production electric car, EV1, and solar energy race car, Sunracer.

About VivoPower

Established in 2014 and listed on Nasdaq since 2016, VivoPower is an award-winning global sustainable energy solutions B Corporation company focused on electric solutions for off-road and on-road customised and ruggedised fleet applications as well as ancillary financing, charging, battery and microgrids solutions.

VivoPower’s core purpose is to provide its customers with turnkey decarbonisation solutions that enable them to move toward net-zero carbon status. VivoPower has operations and personnel covering Australia, Canada, the Netherlands, the United Kingdom, the United States, the Philippines, and the United Arab Emirates.

About FAST

FAST is a Canadian headquartered hydrogen technology company that focuses on developing technologies that promote the adoption of hydrogen. FAST will be launching several vehicle models powered by hydrogen powered internal combustion engines as well as a conversion platform for gasoline and diesel vehicles to run on hydrogen. FAST has offices and factory facilities in Toronto (Canada), Tokyo (Japan) and Yamagata (Japan).

Forward-Looking Statements

This communication includes certain statements that may constitute “forward-looking statements” for purposes of the U.S. federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterisations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements about the achievement of performance hurdles, or the benefits of the events or transactions described in this communication and the expected returns therefrom. Forward-looking statements in this press release include statements regarding VivoPower and FAST’s ability to reach a definitive agreement and to complete the merger transaction as set out in the heads of agreement, completion of the Tembo transaction with CCTS and the potential distribution of the Tembo shares to shareholders. These statements are based on VivoPower’s management’s current expectations or beliefs and are subject to risk, uncertainty, and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of VivoPower’s business. These risks, uncertainties and contingencies include changes in business conditions, fluctuations in customer demand, changes in accounting interpretations, management of rapid growth, intensity of competition from other providers of products and services, changes in general economic conditions, geopolitical events and regulatory changes, and other factors set forth in VivoPower’s filings with the United States Securities and Exchange Commission. The information set forth herein should be read in light of such risks. VivoPower is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of new information, future events, changes in assumptions or otherwise.

Contact
Shareholder Enquiries
shareholders@vivopower.com

FAQ

What is the equity valuation of VivoPower (VVPR) in the proposed merger with FAST?

The proposed merger values VivoPower's equity at US$556 million, implying a share price of US$101 per VVPR share.

How many new shares will VivoPower (VVPR) issue as part of the merger with FAST?

VivoPower is expected to issue 5.72 million restricted new shares as consideration for the merger with FAST.

What percentage of the combined company will VivoPower (VVPR) shareholders own after the merger?

VivoPower shareholders are expected to own 49% of the pro forma combined group upon closing of the proposed merger.

When is the target completion date for the merger between VivoPower (VVPR) and FAST?

The target completion date for the merger between VivoPower and FAST is December 31, 2024.