Electric truck maker Lordstown Motors is the latest company to find a ticket to ride to Wall Street through a merger with a blank check company.
Lordstown Motors, which plans to make an electric pickup for commercial fleets called the Endurance, said Monday it will combine with an already public firm named DiamondPeak Holdings Corp (DPHC). The company said the deal should help it fulfill its goal of beginning production on the Endurance in the latter half of 2021.
DiamondPeak shares rose nearly 15% in early trading on the news Monday.
The merger is expected to close in the fourth quarter. After it’s complete, DiamondPeak will change its name to Lordstown Motors and its ticker to RIDE.
The transaction is the latest deal with a so-called special purpose acquisition company. Privately held firms are increasingly bypassing the more traditional route of making it to Wall Street – selling shares through an initial public offering – in favor of mergers with an already public SPAC.
As part of the deal, Lordstown Motors will receive $500 million in financing from Fidelity, Wellington Management and the Federated Hermes Kaufmann Small Cap Fund as well as funds managed by BlackRock (BLK).
General Motors (GM) also said Monday it was investing $75 million in Lordstown Motors as part of the $500 million deal. Lordstown bought a 6.2 million square foot plant in Lordstown, Ohio, from GM last year that the automotive giant had previously planned to shut down.
The plan to shutter the Ohio factory was controversial and came under fire from President Trump.
A third electric vehicle company, Fisker, is also looking to go public through a merger with a SPAC named Spartan Energy (SPAQ). And electric truck company Rivian recently raised $2.5 billion as it looks to compete with electric car leader Tesla (TSLA).
In another sign of the electric car market’s boom, Tesla shares have soared more than 250% so far in 2020 as Elon Musk’s company continues to prove that it can be consistently profitable. That has led to speculation that Tesla may soon be added to the blue chip S&P 500 index.