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Daimler Trucks invests in Proterra electrification SPAC

Electrification technology company to receive $648 million in reverse merger

Heavy-duty electric transit buses, drivetrains, batteries and charging system maker Proterra will go public in a reverse merger with special purpose acquisition company ArcLight Clean Transportation Corp. (Photo: Proterra)

Proterra Inc., which makes heavy-duty electric transit buses, drivetrains, batteries and charging systems, will go public in a reverse merger with special purpose acquisition company (SPAC) ArcLight Clean Transportation Corp. (NASDAQ: ACTC)

Daimler Trucks, already a Proterra investor and technology partner, is among the financial backers of the deal that will bring $648 million in cash to Proterra when the business combination is completed. 

ArcLight is a so-called blank check company created specifically to merge with an existing company and bypass the more restrictive traditional initial public offering.

Electrifying SPAC targets

Electric vehicles, infrastructure and component makers have been the targets of about 15 SPAC deals in the past year. Proterra, producing electric transit buses for more than a decade, is active in all three areas. Proterra was one of few high-profile targets remaining in the electrification space.

The proposed reverse merger with ArcLight gives Proterra an enterprise value of $1.6 billion. Its common stock is expected to trade on the NASDAQ under the ticker symbol PTRA.

Proterra makes battery and electrification systems for commercial vehicle manufacturers and has produced more than 550 heavy-duty electric transit buses with more than 16 million miles traveled. 

Partners include the Thomas Built Buses and Freightliner Custom Chassis Corp. subsidiaries of Daimler Trucks North America (DTNA). The truck maker co-led a $155 million fundraising round for Proterra in 2018.

Steady expansion

Proterra operates manufacturing facilities in California and South Carolina, and a research and development lab in Silicon Valley. The company recently added a battery production line in its electric transit bus manufacturing facility in Los Angeles County.  

“After delivering our first electric transit bus a decade ago, Proterra has transformed into a diversified provider of electric vehicle technology solutions to help commercial vehicle manufacturers electrify their fleets” Proterra Chairman and CEO Jack Allen said in a press release. Allen will continue to lead the company after the merger.

Generating revenue

Proterra expects $193 million in revenue for 2020. It has $750 million in existing orders and backlog and a 26% gross margin expansion over the past three years.

“This transaction enables Proterra to take the next step towards our mission of advancing EV technology to deliver the world’s best-performing commercial vehicles,” said Allen, a former chief operating officer of Navistar International Corp. (NYSE: NAV).

Jake Erhard, ArcLight CEO, said Proterra’s first-mover advantage in electric buses and its proven ability to scale its business, were attractive.

Upon completion of the transaction, Proterra expects to have up to $825 million in cash to fund its growth, ultimately leading to battery technology to electrify all commercial vehicle segments. ArcLight raised $278 million through its IPO and $415 million through a private investment in public equity (PIPE) share sale.

In addition to Daimler, PIPE participants included SPAC investment regulars Fidelity Management & Research Co. LLC, and funds and accounts managed by BlackRock. Proterra’s private shareholders are contributing 100% of their holdings to the new company. They are expected to own more than 60% of the post-merger Proterra.

Not so QELL

Proterra co-founder and former CEO Ryan Popple is a director of QELL Acquisition Corp., a $380 million SPAC still seeking a merger target. FreightWaves questioned whether QELL was a likely partner for Proterra because of Popple’s role.

“We know Proterra. We love Proterra,” QELL CEO Barry Engle told FreightWaves last October. “It’s a great company. It is in fact a private company, and companies like that would be a very good candidate for a SPAC.”

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Click for more FreightWaves articles by Alan Adler.

Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.