Motorcycle manufacturer Harley-Davidson is merging its electric motorcycle unit with a special acquisition company in a deal estimated to be worth around $1.77 billion. The company announced Monday that LiveWire, which was spun off from Harley-Davidson, would be going public through the merger.
Harley-Davidson initially launched LiveWire earlier this year as a way for it to capitalize on younger customers who want to buy electric-powered motorcycles. The 118-year-old company has lost significant market share in the industry as its core baby boomer customers have grown older and lost interest in its classic-styled motorcycles.
LiveWire is merging with AEA-Bridges Impact Corp, a SPAC founded by John Garcia and Michele Giddens, two New York-based private equity executives. Last year, Garcia and Giddens partnered together with the goal of merging with a company that is aiming to achieve the United Nations' Sustainable Development Goals.
Under the deal, Harley-Davidson's chief executive officer, Jochen Zeitz, will become the chairman of LiveWire for the next two years. Harley-Davidson will retain a 74% stake in the combined company.
The acquisition will be financed through private investment in public equity with AEA-Bridges' $400 million cash held in trust, a $100 million investment from Harley-Davidson, and a $100 million investment from KYMCO.
The merged company is expected to list on the New York Stock Exchange under the ticker symbol, "LVW."
The two companies have partnered with a third-party company for the deal. Harley-Davison and AEA-Bridges have signed a deal with Taiwanese motorcycle manufacturer, Kymco, which had agreed to help manufacture and distribute LiveWire's future electric motorcycle models.
During an investor presentation, Harley-Davidson forecasted that LiveWire should produce sales volumes of more than 100,000 electric motorcycles by 2026. The company claims that LiveWire will be "redefining motorcycling" by becoming the industry leader in all-electric motorcycles.
Harley-Davidson is betting on increasing awareness about climate change by producing greener versions of its products. Over the past few years, automakers have made similar bets by increasing their investments in electric vehicles and EV technologies.
Apart from increasing revenue and interest, Harley-Davidson is also planning to cash in on the growing investor interest in EV stocks. Rivian, an Amazon-backed electric vehicle manufacturer, surpassed Ford and General Motors in market capitalization last month when its stock surged past $100 billion during its market debut.
Harley-Davidson's stock price had increased by 11.3% in premarket trading following its announcement. Meanwhile, AEA-Bridges stock had surged by more than 3.4% on the news.
