Microvast, Inc., Stafford, Texas, United States, a leading global provider of next-generation battery technologies for commercial and specialty vehicles, and Tuscan Holdings Corp. (Nasdaq: THCB), a publicly-traded special purpose acquisition company (“SPAC”), have entered into a definitive merger agreement that will result in Microvast becoming a publicly listed company. Upon the closing of the transaction, the combined company will be named Microvast Holdings, Inc., and is expected to be listed on the Nasdaq Stock Market under the new ticker symbol “MVST.”
Microvast, founded in Houston in 2006, develops disruptive battery technologies for commercial and specialty vehicles, with research and development and production capabilities that span battery materials, multiple battery cell chemistries, modules and packs. The Company’s lower-cost batteries are designed specifically for commercial electric vehicles (EVs) that feature best-in-class fast-charging capabilities, high energy density, significantly longer cycle life and proven safety performance. Microvast’s batteries are now integrated in almost 30,000 vehicles, running in 160 cities in 19 countries, for a total of over 3.8 billion miles traveled on its batteries to date.
Microvast’s battery solutions are powered by its broad, proprietary intellectual property portfolio that spans all four major battery components and is fully owned and protected by more than 550 patents. Due to its highly differentiated, vertically integrated R&D and industrialization system, Microvast delivers faster product development, tighter cost control and greater customization to its customers than does its competitors. As a result, the Company is supported by marquee customer partnerships with industry leaders, including CNH Industrial, Oshkosh Corporation and a leading German luxury sports car company, among others, as well as R&D partnerships with BMW, the United States Council for Automotive Research and Argonne National Laboratory.
The market opportunities for Microvast are significant, with a focus on commercial vehicles such as light, medium and heavy-duty trucks, vans, buses, trains, automated guided vehicles, port equipment and mining trucks. Currently, this is generating a robust, and probability weighted, pipeline estimated at $4.1 billion through 2025, and signed contracts with total value of over $1.5 billion through 2027.
Given its unique focus on battery solutions for commercial EVs, Microvast believes it is poised to capitalize on a large and rapidly growing global commercial vehicle market comprising over $1 trillion in annual sales, more than 10 million vehicles, and a commercial EV total addressable market of $30 billion.2 Commercial EV sales currently represent 1.5% of the market but penetration is expected to reach almost 9% in 2025, representing a CAGR of 55%, from 2020 to 2025,3 as battery solutions like Microvast’s continue to displace traditional combustion engines due to improving cost and performance, as well as favorable government regulations to address climate change. Battery developers are expected to play a pivotal role in the EV value chain, with 30–40% of an EV’s value residing within the battery itself.4
Commenting on today’s significant milestones, Microvast’s founder, Chairman, CEO and President, Yang Wu, said, “In 2008, we set out to power a mobility revolution by building disruptive battery technologies that would allow electric vehicles to compete with internal combustion engine vehicles. Since that time we have launched three generations of battery technologies that have provided our customers with battery performance far superior to our competitors and that successfully satisfy, over many years of operation, the stringent requirements of commercial vehicle operators. Today’s announcement marks the beginning of our next chapter working with our marquee customers and R&D partners to pave the way for the mass adoption of commercial electric vehicles, and we are thrilled to team up with Tuscan to advance the path to electrification.”
“In Microvast we have found a disruptive technology company operating in a large, addressable market with a long runway of future growth that has developed long-term competitive advantages and has established a multi-year track record of proving its capabilities. We believe that climate change is one of the world’s greatest challenges and opportunities. It will take a concerted global effort to reengineer the economy in a manner that empowers citizens of the world to thrive sustainably. We are encouraged by the progress and are fortunate to be in a position to help support a company that we believe can play an important role in that future,” said Stephen Vogel, Chairman and CEO of Tuscan. “Mr. Wu and his excellent management team have established Microvast as precisely that pioneering leader within the electric vehicle battery industry.”
Ahmed Fattouh, CEO of InterPrivate Capital, said, “The Microvast team has not only developed cutting-edge battery technology that is highly attractive to its suite of market-leading customers and partners, generating over $100 million in 2020 revenue, but also operates a vertically integrated production process for its battery solutions that is unique in the industry, enabling both enhanced customer service and the opportunity to achieve excellent margins.” InterPrivate partner Brian Pham added, “We are pleased to help drive Microvast’s next phase of growth as it looks to capitalize on the large demand for its products that will come from the electrification of the commercial vehicle market as a public company.”
Microvast’s Co-Founder and Chief Executive Officer, Mr. Wu, will continue to lead the combined company along with the current management team. Mr. Vogel, Tuscan’s Chairman and CEO, will remain as a director of the combined company and will be joined by Dr. M. Stanley Whittingham, who was recently awarded the Nobel Prize in Chemistry for his ground-breaking work on lithium-ion batteries. InterPrivate’s CEO, Mr. Fattouh, is expected to become a board observer.
Transaction Overview
The transaction reflects an implied equity value of the combined company of $3 billion, based on current assumptions, with a $10.00 per share PIPE subscription price. The transaction is supported by strategic partner Oshkosh Corporation as well as funds and accounts managed by BlackRock, Koch Strategic Platforms and InterPrivate Investment Partners. Upon closing, the combined company will receive up to $822 million in cash, comprised of an oversubscribed $540 million PIPE and up to $282 million in cash held in trust by Tuscan, assuming no redemptions by THCB stockholders.
The boards of directors for both Microvast and Tuscan have unanimously approved the proposed business combination, which is expected to be completed in the second quarter of 2021, subject to, among other things, the approval by Tuscan’s stockholders of the merger and the concurrent PIPE transaction, satisfaction of the conditions stated in the definitive agreement and other customary closing conditions, including that the U.S. Securities and Exchange Commission (the “SEC”) completes its review of the proxy statement, the receipt of certain regulatory approvals, and approval by The Nasdaq Stock Market to list the securities of the combined company.
Advisors
Barclays and Houlihan Lokey are acting as financial advisors to Microvast and Shearman & Sterling LLP is acting as legal advisor to Microvast. Morgan Stanley & Co. LLC is acting as financial advisor to Tuscan, EarlyBirdCapital, Inc. is acting as capital markets advisor to Tuscan, and InterPrivate Capital is acting as strategic advisor to Tuscan. Greenberg Traurig LLP is acting as legal advisor to Tuscan, and Graubard Miller is acting as special SPAC counsel to Tuscan. Morgan Stanley & Co. LLC is acting as sole placement agent for the PIPE financing. Davis Polk & Wardwell LLP is acting as legal advisor to Morgan Stanley & Co. LLC.
About Microvast
Microvast, Inc. is a technology innovator that designs, develops and manufactures lithium-ion battery solutions. Founded in 2006 and headquartered in Houston, TX, Microvast is renowned for its cutting-edge cell technology and its vertical integration capabilities which extend from core battery chemistry (cathode, anode, electrolyte, and separator) to battery packs. By integrating the process from raw material to system assembly, Microvast has developed a family of products covering a broad breadth of market applications.
About Tuscan
Tuscan Holdings Corp. is a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Tuscan’s management team is led by Stephen Vogel, Chairman and Chief Executive Officer. Tuscan is listed on Nasdaq under the ticker symbol “THCB.”
About InterPrivate
InterPrivate Capital is a private investment firm that invests on behalf of a consortium of family offices. The firm’s unique independent co-sponsor structure provides its investors with the deep sector expertise and transaction execution capabilities of veteran deal-makers from the world’s leading private equity and venture capital firms. Affiliates of InterPrivate Capital act as sponsors, co-sponsors and advisors of SPACs, and manage a number of investment vehicles on behalf of its family office co-investors that participate in private and public opportunities, including PIPE investments in support of the firm’s sponsored business combinations.
