Hyliion takes reverse merger path to public trading

Hyliion hybrid tractor

Editor’s Note: Updates with J.P. Morgan initiating coverage of Nikola

Hyliion Inc., a startup maker of diesel-electric truck components, expects to begin publicly trading its stock around the end of the third quarter following a merger with a “blank check” company created specifically to find a marriage partner with high-growth potential.

The path is practically identical to one followed by startup electric truck manufacturer Nikola Corp., which went public on June 4. 

Tortoise Acquisition Corp. (NYSE: SHLL) was formed 15 months ago as a special purpose acquisition company (SPAC). It evaluated more than 200 companies before settling on Hyliion, which was founded in 2015.

In addition to $235 million that Tortoise invested from its own initial public offering, a sale of discounted shares raised $325 million in a private investment in public equity (PIPE) at $10 a share. 

Shares on the move

Tortoise shares jumped on the June 19 merger announcement – from $10.22 to more than $18 in intraday trading Monday. The implied market capitalization of Hyliion is $1.5 billion.

The new company, which will be called Hyliion Holdings Corp., will trade as HYLN on the NYSE assuming the merger receives U.S. Securities and Exchange Commission (SEC) approval.

The SEC approval of the Nikola merger with VectoIQ lit the fuse to a huge run-up in the shares of VTIQ. Nikola shares rose 103.7% on June 8, their third day of trading. They traded intraday Monday at $66.70. Prior to the merger, a PIPE raised $525 million for Nikola in addition to $230 million that VectoIQ invested.

Separately, J.P. Morgan Chase became the first major Wall Street Bank to initiate coverage on Nikola with a $45 price target. Though it believes Nikola is a disruptive technology for the trucking industry, Chase said Monday the stock is fully valued.

Name game

Hyliion Holdings lacks the humor of Tortoise, which intentionally chose SHLL as its trading symbol.

“Given the blank check nature of a SPAC, we thought SHLL was a good play on our firm’s name as well as our SPAC,” Stephen Pang, Tortoise Acquisition chief financial officer, told FreightWaves.

All existing shareholders and investors will continue to hold their equity ownership, including Dana, Sensata Technologies, Sumitomo Corporation of Americas, Axioma Ventures, FJ Management, New Era Capital Partners, Colle Capital Partners and others. 

Green trucking

Though both Hyliion and Nikola operate in the low-carbon green trucking space, Hyliion’s diesel-electric hybrid technology is already on the road. Nikola begins production of battery-electric trucks with CNH Industrial N.V. (NYSE: CHNI) subsidiary IVECO in a joint venture next year in Europe. 

Groundbreaking for Nikola’s own plant in Coolidge, Arizona, is set for July 23 with construction expected to take 12-18 months. The Arizona plant will build battery-electric trucks first followed by hydrogen fuel cell models in 2023.

Nikola declined comment Monday on Hyliion’s announcement.

“We are building solutions that are available today and address the immediate needs of today’s trucking fleets,” said Thomas Healy, Hyliion CEO and founder. 

“Hyliion’s solutions were specifically developed to utilize existing infrastructure in an effort to support rapid technology deployment,” he said. “Our mission is to enable our fleet customers to quickly realize lower carbon emissions and significantly lower cost of ownership benefits provided by our technology.”

Hyliion upfits Class 8 trucks to run on dual fuel sources. It is providing three of its 6X4HE heavy-duty models to Penske Truck Leasing. Hyliion investor and electrification partner, Dana Inc. (NYSE: DAN) showed the first of the trucks in March at the 2020 American Trucking Associations’ Technology & Maintenance Council meeting in Atlanta.

Penske Truck Leasing operates a diverse portfolio of electrified trucks. It is using 20 fully electric trucks from  Daimler Trucks North America’s Freightliner Electric Innovation Fleet split between heavy-duty eCascadias and medium-duty eM2s for deliveries in Southern California.

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