REE Automotive Ltd. and 10XCapital Venture Acquisition Corp (10X SPAC), a special purpose acquisition company (SPAC), have entered into a merger agreement for a business combination that would result in REE becoming a publicly listed company. Following the close, NASDAQ will list the combined company under the ticker “REE.”
REE is revolutionizing the e-Mobility industry through its highly modular and disruptive REEcorner technology which integrates critical vehicle components (steering, braking, suspension, powertrain and control) into the arch of the wheel. REE’s proprietary x- by-wire technology challenges century-old automotive concepts by being agnostic to vehicle size and design, power-source and driving mode (human or autonomous). Platforms utilizing REEcorners can present significant functional andoperational advantages over conventional EV “skateboards” currently available in the market.
REE’s innovative technology enables fully flat and modular EV platforms that can carry more passengers, cargo and batteries as compared to conventional electric or internal combustion (IC)vehicles, thereby improving next generation emobility for new electricand legacy OEMs, logisticscompanies and service providers. Compared to IC and electric vehicles, REE offers customerscompetitive pricing and substantially lower TCO with faster time-to-market.
REE targets commercial and MaaS markets, enabling them to build mission-specific electric vehicles as part of the shift towards electrification and autonomy. The shift is driven by the growth in e-commerce, government regulations on carbon emissions and public policy, as well as newly developed mobilityconcepts which require complete freedom of design for the build-out of any size or shape of electric or autonomous vehicle – from Class 1 through 6. For OEMs, incorporating REEcorner technology into EV product portfolios enables fast and efficient entry into EV markets. Mobility service providers such as delivery and logistics companies, e- commerce retailers, ride sharing companies and more can leverage the REEcorner architecture to build EVs based on their exact needs and specifications, while no longer being constrained to purely “off-the-shelf” offerings.
REE’s groundbreaking in-house drive-by-wire, brake-by-wire and steer-by-wire technology enables lower TCO through fast REEcorner replacements in under an hour, over-the-air (OTA) updates andhardware upgrades. REE’s data harvesting capabilities can be used to further reduce TCO via intelligent preventative maintenance features. REE’s award-winning technology is backed by an extensive intellectual property portfolio across engineering and design, with more than 60 patents to date.
REE will utilize a CapEx-light manufacturing model comprised of globally located integration centers, which creates scalable and agile unit economics. REE will utilize manufacturing capacity via a secured and exclusive global network of Tier 1 partners in over 30 countries, with point-of-sale assembly. This strategy is expected to enable REE to reach profitability by 2024.
“We believe that our technology will become the cornerstone for our customers to create better andgreener e-Mobility services that will be the backbone of our society. Being the only truly horizontal player in the market today positions us to play a major role in accelerating electrification of mission-specificvehicles in multiple sectors such as delivery fleets, Mobility-as-a-Service, e-commerce retailers and newmobility players. There is no limit to who we can serve, as REE is unbound in its capabilities andopportunities.” said Daniel Barel, REE Automotive Co-Founder and Chief Executive Officer. “We are trulyexcited to be partnering with Hans Thomas and the 10X Capital leadership team as we begin our next chapter as a publicly listed company in our journey towards a better, cleaner and more sustainable e-Mobility future.”
“10X Capital has a strong commitment to sustainability and we are very enthusiastic to partner with REEas it executes on its strategic vision of becoming the cornerstone of next generation EVs,” said HansThomas, Chairman and Chief Executive Officer of 10X Capital.
“REE addresses an enormous totaladdressable market, and its ability to provide EV technology solutions to a broad array of markets is highly compelling. Daniel has assembled a world-class team of engineers and designers and is providing a truly unique offering in the EV space. We are also thrilled by the alignment with key strategic partners and investors that REE has assembled, and with a significant pipeline of orders reflected in itsMOUs with top global automotive and mobility companies, we believe that REE is firmly on its way toestablishing itself as a leader in the industry. The EV revolution is happening today, and it will bepowered by REE.”
The transaction values the combined company at a pro forma enterprise value of $3.1 billion. Pursuant to the merger and following the share exchanges, the combined company is expected to receive approximately $500 million in gross cash proceeds from a combination of US $201 million in cash held in10X SPAC’s trust account, assuming no public shareholders exercise their redemption rights at closing, and $300 million from a fully committed PIPE with participation from long-term strategic investors including Koch Strategic Platforms, Mahindra & Mahindra and Magna International.
As a result of outsized demand, the PIPE offering was meaningfully oversubscribed and upsized. All existing shareholders and investors will continue to hold their equity ownership, including Mitsubishi Corporation, American Axle, and Musashi Seimitsu Industry. Net cash from the transaction will be usedto fund growth of the combined company. Current REE shareholders will remain the majority owners of the combined company at closing.
The proposed transaction was unanimously approved by REE’s Board of Directors as well as 10X SPAC’s Board of Directors and is expected to be completed by the end of the first half of 2021. The proposed transaction will be subject to approval by REE’s shareholders and satisfaction or the waiver of the closing conditions identified in the merger agreement.