Samvardhana Motherson to acquire 11% of REE Automotive for $15M

REE Automotive (NASDAQ: REE), an automotive technology company focused on by-wire electric trucks and platforms, and Motherson Group, a global engineering and manufacturing specialist and major supplier to the automotive industry, announced a strategic agreement, where Samvardhana Motherson International Limited (SAMIL) through its subsidiary MSSL Consolidated Inc., or its affiliates will invest up to USD 15 million to acquire up to 36,39,010 Class A Ordinary shares of REE. This investment will give SAMIL up to 11% of REE’s shares on a fully diluted basis. Under this agreement, Motherson will manage the sourcing and supply chain of production parts and support the assembly of REE’s REEcorner® and P7 electric trucks. Motherson will also nominate a director to join REE’s board.

In addition, REE is raising USD 45.35 million through a registered direct offering of 11,001,941 Class A ordinary shares (or pre-funded warrants) at USD 4.122 per share.

Investors include M&G Investments (USD 20 million), Motherson (USD 15 million), and Varana Capital (USD 5.25 million).

Following the offering, M&G will hold approximately 16% of REE’s shares, Motherson up to 11% on a fully diluted basis (up to 19% on a non-diluted basis), and Varana Capital 8%. The offering is expected to close by September 19, 2024.

Through the new collaboration, REE aims to accelerate production to address growing demand and anticipated fleet orders from multinational customers. REE provides a software-driven medium-duty electric truck designed to meet the expected transition to electric vehicles, with projections of over 240,000 medium-duty trucks in the U.S. and more globally. The partnership with Motherson is intended to help REE expand its customer base, advance order fulfillment, improve margins, and broaden its patent portfolio.

Laksh Vaaman Sehgal, Vice Chairman, Motherson Group, said, “We are pleased to announce our long-term agreement with REE to accelerate its industrialization within a mutually beneficial commercial framework. We have been truly impressed by REE’s remarkable technology, exceptional product offerings, and robust team. We look forward to facilitating REE’s growth and technological advancement by expertly managing its supply chain and utilizing our world-class engineering and manufacturing capabilities to drive commercialization and industrialization. We also want to strengthen REE’s integration into the automotive ecosystem by delivering unparalleled customer support across the value chain. We believe that this strategic partnership will contribute towards Motherson’s diversification and increasing content per vehicle strategy.”

REE Co-founder and CEO, Daniel Barel said, “We are very excited to enter into this agreement with Motherson, as I believe this agreement will enable us to leapfrog over many of the challenges others face when ramping up production. Motherson’s global footprint and manufacturing prowess combines perfectly with REE’s technology and innovation mindset. This combination will benefit our customers and investors alike, by pushing forward the transition towards electrification and carbon neutrality. We are proud to join forces with Motherson and looking forward to learning from their incredible story and amazing culture.”

M&G Investments’ Portfolio Manager, Carl Vine, said, “I believe that this is a transformational transaction for REE and we are delighted to be involved. As shareholders in both companies, we are confident that the combination of core competencies from both sides will result in a sigh of relief from global fleet owners, who have been starved of an electrified product line-up that can be produced and serviced at scale. This is a win-win all round.”

Also read: Mahindra ties up with REE Automotive for development of commercial EVs