It was announced this morning that electric truck maker Nikola will acquire EV battery company Romeo Power in all-stock deal. The acquisition values Romeo at $144 million, which is a 89% discount from where the company was valued when it was brought public via SPAC merger December 30, 2020.- when it was valued at $1.33 billion.

Romeo has been hampered by issues ever since going public, including production and supply chain issues. The deal still requires shareholder approval and would close before year's end. As part of the proposed, current Romeo shareholders would receive $0.74 worth of Nikola stock per 1 share of Romeo - or 0.1186 shares of Nikola per share of Romeo, based on current stock prices.

The move is claimed to be strategic by Nikola, who seeks to reduce battery costs going into the production of their trucks. It should save Nikola up to $350 million by 2026. They were already a customer of Romeo's, so there's not only the familiarity but the securing of a tight supply chain. This is perhaps the beginning of a movement toward consolidation in the EV industry. With so many start-ups and early stage companies, it's only natural that some come together in order to survive. Many will fail, but perhaps this move gives new life and hope to both Nikola and Romeo going forward.

While the move may be beneficial for the companies, shareholders may not agree. A lawsuit was filed within the hour of the acquisition announcement, questioning whether the sale to Nikola is fair for Romeo shareholders.