AEA-Bridges Bloomberg Article for Filing 12.13.21
Bloomberg
Harleys Green CEO Seizes on SPAC
Craze to Speed Electrification
By Gabrielle Coppola and Matthew Miller
13 December 2021
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New company to have enterprise value of about $1.77 billion
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LiveWire to be first U.S. public electric-motorcycle company
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Harley-Davidson Inc. is seizing on investor appetite for EV upstarts by listing its electric-motorcycle unit through a reverse merger, furthering Chief
Executive Officer Jochen Zeitzs ambition to make the manufacturer a leader in the electric revolution.
LiveWire, a stand-alone division Harley
created earlier this year, will merge with special purpose acquisition company AEA-Bridges Impact Corp. in a transaction valuing the combined entity at $1.77 billion, the companies said Monday. LiveWire
would reap net proceeds of about $545 million from the deal, and Harley would retain a 74% stake.
Harley jumped 5.2% to $38.73 at 3:37 p.m. in New
York after climbing as much as 19%, the most intraday in 13 months. AEA-Bridges advanced 3.2% to $10.16.
Zeitz
a former Puma SE executive who took the helm of the troubled, 118-year-old manufacturer in February 2020 is boosting investment in Harleys core
heavyweight-bike segment while prioritizing electrification, a strategy he championed while serving as a board member. Listing LiveWire will bring the capital needed to speed product development, while helping Harley by shifting costs to a separate
entity.
We want to lead in electric, Zeitz said on Bloomberg Television. Its timely because in order to lead you have to be fast,
and you want to be first to market to really define what electric means in the future.
The reverse merger will fund LiveWires business plan
until it breaks even in 2026, executives said in a call with analysts. Zeitzs Hardwire turnaround plan had called for investing $190 million to $250 million annually, in part to develop Harleys electrification technology.
LiveWire aims to sell more than 100,000 electric motorcycles in 2026, up from just 387 this year, and bring in $1.8 billion in revenue, according to an
investor presentation. That would be more than half the bikes Harley delivered last year, when the Covid-19 pandemic closed plants, and roughly half its 2019 shipments.
We believe this is another example of a company trying to unlock value of a strategic growth asset, Joseph Spak, an analyst at RBC Capital
Markets, said in a note to clients. Other auto players should take note and will likely monitor the success of such transactions to see if they sustainably create shareholder value.
Although SPAC deals have been common this year, particularly in the EV industry, those typically have been of entire startups, not units of bigger companies.
Earlier this year Ardagh Group SA merged its metal-packaging business with a SPAC. Polestar, an electric-car maker founded by Volvo Car Group and owner Zhejiang Geely Holding Group Co., has agreed to go public
in a reverse merger.