Hennessy Capital Acquisition Corp. and autonomous trucking software developer Plus canceled their planned SPAC merger on Monday, a breakup telegraphed in recent weeks by Hennessy’s claim that regulations from outside the United States — likely China — were too big a hurdle to clear.
The termination is effective immediately given that Monday was the “outside date” for the business combination to go into effect. It was unclear whether HCIC shareholders who invested in Hennessy’s initial public offering and private investment in public equity (PIPE) would immediately receive their funds or whether Hennessy would seek a new merger target.
“HCIC was formed to merge with a company that provides sustainable technologies,” Daniel J. Hennessy, chairman and CEO of HCIC V, said in a press release. “We believe in the potential for autonomous trucks to transform the trucking industry and in Plus’s ability to continue its global deployment of autonomous trucking technology.”
Because the two sides mutually agreed to the termination, neither is paying a breakup fee.
Hennessy left the door open for the two companies to work together.
“We remain optimistic that the parties can once again explore a business combination in the near term that will further advance sustainable transportation,” he said.
Hennessy is a veteran creator of shell companies funded by “blank check” investors seeking to profit from merging with a startup or early-stage company.
Hennessy sponsored the public debuts of flatbed logistics company Daseke Inc. (NASDAQ: DSKE) in 2017 and more recently backed startup electric vehicle maker Canoo Inc. (NASDAQ: GOEV) among four previous SPAC sponsorships. Canoo is the subject of a wide-ranging SEC investigation.
A $3.3 billion deal undone
HCIC V raised $345 million during an initial public offering in January. An additional $150 million was raised from funds participating in the PIPE, which was smaller than many others raised even in a cooling SPAC market.
The deal originally was expected to bring $500 million in cash and a $3.3 billion valuation to Plus in the third quarter. But a Sept. 27 Securities and Exchange Commission filing suggested the deal was in trouble.
“In light of recent developments in the regulatory environment outside of the United States, Plus and HCIC are discussing a potential restructuring of the SPAC merger and business combination,” HCIC said in the filing, not specifically mentioning China.
Plus telegraphed difficulty by omitting reference to the SPAC merger in its two most recent press releases. The SPAC had been mentioned in the lead of earlier releases.
Despite a deal to provide PlusDrive software retrofits to 1,000 Amazon trucks with the possibility that Amazon could get a warrant to purchase up to 20% of Plus, the Cupertino, California-based company increasingly is viewed as operating primarily in China, where First Auto Works is its manufacturing joint venture partner and is doing factory installations of PlusDrive software.
“Plus has achieved tremendous momentum in executing against our plans to bring autonomous trucks to market globally. In 2021, we started delivery of our driver-in autonomous driving solution, PlusDrive, to customers and received thousands of pre-orders,” Plus co-founder and CEO David Liu said.
“We also completed a fully driverless truck demo on a highway [in China] that showcased the future of trucking.”