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Exro to acquire EV drivetrain company SEA Electric

Transaction aimed at growth in commercial vehicle market

Exro Technologies Inc. (EXRO-T) has announced it will acquire Torrance, Calif.-based electric drivetrain system provider SEA Electric Inc. to generate growth in the commercial electric vehicle (EV) market.

"Our merger with SEA not only creates significant revenue and cost synergies, but positions Exro to amplify its growth with new partners while continuing to develop our existing relationships,” Sue Ozdemir, Exro’s CEO, said in a release.

Calgary-based Exro, a developer of power control electronics for EV motors and batteries, will be merging the technology from both companies to form a complementary platform, according to the company.

The acquisition values SEA Electric at approximately $402 million (all figures Cdn). The transaction is expected to close by the end of Q1 2024, depending on the approval of Exro shareholders.

A concurrent capital raise was also announced, with Exro raising $30 million and SEA Electric entering into arrangements to receive $12 million in debt financing.

Synergizing with SEA Electric

SEA Electric’s SEA-Drive propulsion technology controls the components that electrify vehicles, ranging from trucks to light commercial vehicles.

The company was awarded a five-year contract from Mack to provide up to 5,000 of the propulsion systems, and with Hino for a three-year agreement of up to 3,500 SEA-Drive systems.

Combined with Exro’s Coil Drive, which offers the ability to switch electric motor configurations while in use, the technologies complement each other as an end-to-end solution for vehicles ranging from passenger vehicles to large commercial trucks, according to Exro.

Exro is targeting delivery of more than 1,000 propulsion technology systems to original equipment manufacturers in 2024, forecasting aggregate revenues of over $200 million. A path to profitability within 12 months of completing the merger is projected when combined with an asset-light business model, the company added.

The aim of the merged company is to “secure the short-term with a strong order book while maintaining a continued focus on disruptive innovation with next generation electric motor and battery control technologies.”

"With OEM contracts in hand and industrialization underway, SEA Electric will benefit greatly from this business combination,” SEA Electric’s founder and CEO Tony Fairweather, said in the release.

“Exro provides the resources, capabilities and automotive systems that will ensure the successful execution of these important contracts, as well as offering complementary and differentiating technology in the form of its Coil Driver and Cell Driver. I am very excited about our combined future."

The combined $42 million capital raise will be used to fund the expenditures, working capital and business requirements of the merged Exro, a release said.

Exro had previously engaged with SEA Electric, signing an agreement to supply 1,500 of its Coil Drive Systems to SEA Electric in August 2022

The new Exro leadership

If the merger is approved, Ozdemir will remain as chief executive, while Fairweather will be the chief product officer of Exro.  

The board of directors will have up to nine members with Exro chairman Rod Copes remaining in his position. The directors will consist of selected members from the current boards of directors of Exro and SEA.

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