BAJAJ BROKING
Samvardhana Motherson will invest $15 million for an 11% stake in REE Automotive. The deal includes supply chain management to support REE’s commercial EV platform development.
Samvardhana Motherson Ltd. announced its plans to invest $15 million for an 11% equity stake in REE Automotive Ltd., a Nasdaq-listed company specialising in modular platforms for electric vehicles (EVs). This acquisition represents a fully diluted basis, while a 19% stake is secured on a non-diluted basis.
The transaction will take place through Samvardhana Motherson’s subsidiary, MSSL Consolidated Inc., or its affiliates, marking a significant expansion into the electric vehicle industry. As part of this deal, Samvardhana Motherson will subscribe to over 36 lakh Class A Ordinary shares of REE Automotive at a price of $4.122 per share.
REE Automotive, headquartered in Israel, designs and integrates vehicle components into modular platforms tailored for commercial electric vehicles, particularly in last-mile delivery solutions. The company’s unique technology consolidates vital vehicle systems—steering, brakes, suspension, and powertrain control—into a compact module. This innovation is protected by a portfolio of 175 registered and pending patents globally.
REE Automotive reported a modest turnover of $1.6 million in 2023, though it has ambitious growth plans, with an order book for 600 trucks to be executed by 2025. The company operates manufacturing facilities in Coventry, UK, and Austin, Texas, positioning itself as a key player in the commercial EV market.
As part of the investment, Samvardhana Motherson and REE Automotive have entered into a supply chain management agreement. This partnership aims to accelerate the industrialisation of REE’s modular EV platform, with Samvardhana Motherson managing the entire supply chain. This includes sourcing, integration, and module management, giving Samvardhana Motherson exclusive control over REE’s supply chain operations.
The cash transaction is expected to close within 30 days, contingent upon fulfilling all necessary conditions. The move into the electric vehicle sector aligns with Samvardhana Motherson’s broader diversification strategy, but concerns have been raised regarding its financial stability. Citi, a brokerage firm, has issued a negative catalyst watch, citing potential pressure on the company’s balance sheet due to additional debt.
With a net debt of ₹16,000 crore and possible equity fundraising leading to earnings per share (EPS) dilution, market analysts have expressed caution. Nonetheless, Samvardhana Motherson's share price has seen an 80% rise in 2024, despite closing 1% higher on Friday at ₹190.
Samvardhana Motherson’s strategic investment in REE Automotive is a calculated move to bolster its presence in the EV market, particularly in the last-mile delivery segment. The company’s involvement in managing REE’s supply chain could provide a competitive advantage as the EV industry continues to expand globally.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For All Disclaimers Click Here: https://bit.ly/3Tcsfuc
Commodities Market Today | WTI Crude Rises 1.6%, Gold Falls, Silver Gains 1.2%
03 Oct, 2024 | 1 Min. read
Share Market Today | Gift Nifty Hints At Over 250 Points Drop In Indian Markets
03 Oct, 2024 | 4 Min. read
Gold Rate Today | Gold Falls 0.4%, Silver Rises 1.2% In Latest Market Update
03 Oct, 2024 | 2 Min. read
Zydus Lifesciences Secures US FDA Nod For Prostate Cancer Drug
03 Oct, 2024 | 2 Min. read
Ashoka Buildcon Wins ₹1,264 Cr MMRDA Creek Bridge Projects
03 Oct, 2024 | 2 Min. read
Oil Climbs For Third Day As Middle East Tensions Escalate
03 Oct, 2024 | 2 Min. read
Mankind Pharma Secures All Approvals For BSV Acquisition
03 Oct, 2024 | 2 Min. read
Guide to Gaming Industry Stocks: Investment Tips & Insights
03 Oct, 2024 | 5 Min. read
Nifty 50 and Nifty 50 TRI: Meaning & Key Differences
03 Oct, 2024 | 5 Min. read
Timing the Market or Time in the Market: Which is Better?
03 Oct, 2024 | 3 Min. read
Trading Profit & Loss Report: A Comprehensive Analysis
03 Oct, 2024 | 5 Min. read
Biocon Biologics Secures ₹9,100 Crore Refinancing Boost Amid Share Dip
03 Oct, 2024 | 1 Min. read
RBI Launches ULI: Transforming Loan Access
August 27, 2024 | 4 Min. read
Textile Sector in India
September 20, 2024 | 5 Min. read
List of IPOs with DRHPs Filed
November 30, 2023 | 3 Min. read
Aditya Birla Group
September 28, 2023 | 10 Min. read
Bajaj Housing Finance Ltd IPO: Things Smart Investors Need to Know
September 05, 2024 | 4 Min. read
Budget Stock Ideas 2024-2025 | Stocks to Buy Today
July 24, 2024 | 4 Min. read
IPO Eligibility Criteria : Full Details
March 15, 2024 | 6 Min. read
What Is the Lock-In Period in IPOs?
October 18, 2023 | 6 Min. read
Godfrey Phillips Announces 2:1 Bonus Shares
September 16, 2024 | 7 Min. read
Jindal Group- A Comprehensive Analysis
September 27, 2024 | 7 Min. read
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading