Toronto, Ontario — In this week’s Tuesday Ticker, General Motors confirms a new deal with EV startup Nikola, AkzoNobel commences a share buyback and we take a look at how AutoCanada’s shares have soared this year.
News for Nikola
General Motors and Nikola, a startup endeavouring to build alternative-fuel vehicles, have announced a reworked, smaller agreement that keeps a previously planned fuel-cell partnership intact, but eliminates equity stake in the startup for GM, as well as plans for the automaker to build Nikola’s electric pickup truck.
In September, the two companies have announced a deal wherein GM would supply batteries, a chassis architecture, fuel cell systems as well as a factory to build Nikola’s proposed Badger pickup in return for an 11 percent stake and US$700 million. The deal, however, was brought into question after a short-seller accused the startup of fraud—a claim that Nikola continues to deny.
The new deal—a non-binding memorandum of understanding—is still subject to negotiation and a definitive deal, both GM and Nikola said in separate statements.
Under the new agreement, GM will not take an equity stake in Nikola as originally planned. GM will supply its fuel-cell system for Nikola’s Class 7 and Class 8 commercial semi-trucks, Nikola said. The companies are also discussing Nikola’s potential use of GM’s Ultium electric battery system in its commercial trailers.
The agreement came on Nov. 30, just a few days ahead of a Dec. 3 deadline, and ends months of speculation over GM’s commitment to the Phoenix-based company after a short-seller report criticized Nikola’s ability to deliver promises and its transparency with investors. The allegations of deception hammered the once high-flying stock, prompted the resignation of founder Trevor Milton and forced GM to reconsider the terms of the initial agreement.
The Badger pickup had been an integral piece of the earlier proposed deal with GM, though now it appears unlikely it will ever be built. Nikola has said the vehicle depended on finding a manufacturing partner and announced on Nov. 30 that it will refund all deposits taken for the truck.
AutoCanada’s ascension
At the start of this year, AutoCanada stocks sat at all-time lows—now, Canada’s only publicly listed auto dealership firm is emerging as a powerhouse alongside its record-setting third-quarter financial results.
AutoCanada’s share price was up 85 percent over the last quarter, while the company’s shares have been boosted 124 percent in the last twelve months.
The upswings could be related to the recently released financial results, which were unveiled on Nov. 12. The results dictate AutoCanada’s third-quarter revenue was $1,017.1 million ($1.01 billion) compared to $981.9 million in 2019’s third quarter, marking the first time the company has exceeded $1 billion in sales in a single quarter.
“We’re confident that with our nimble and proactive focus we will continue to drive industry-leading performance in any environment, and that our complete business model, our balance sheet and our team position us for strength and resilience as the economy recovers,” said the company during its third-quarter earnings call.
As of Monday, Dec. 7 at 10:30 a.m., AutoCanada’s shares sit at $29.24—a 137.4 percent increase from the beginning of this year.
Buyback boost
AkzoNobel will commence the repurchase of common shares up to a value of €300 million (CAD$466,850,000) today after announcing a share buyback on Oct. 21, 2020.
The company has engaged a third party to manage the program and perform transactions on its behalf. It is intended that the shares will be cancelled following repurchase.
The share buyback will be implemented within the limitations of the authority granted by the Annual General Meeting (AGM) on April 23, 2020. The share repurchase program will be conducted within the parameters prescribed by the Market Abuse Regulation 596/2014 and the safe harbour parameters prescribed by the Commission Delegated Regulation 2016/1052 for share buybacks.
In accordance with regulations, AkzoNobel will inform the market about the progress made in the execution of this program through weekly updates and through this link.
