Arrival, Kensington Capital Acquisition Corp announce business combination

Arrival and Kensington Capital Acquisition Corp, a special purpose acquisition company, announced their entry into a definitive agreement for a business combination. Upon closing of the transaction, the combined company will continue to be named "Arrival," and its ordinary shares are expected to remain listed on Nasdaq under the ticker symbol (ARVL). Founded in 2015, Arrival aims to revolutionize the Class 4 EV segment. In the first half of 2023, Arrival continued to build certified Vans at its Bicester, United Kingdom factory, enabling the company to further develop its automated factory processes and integrate its autonomous mobile robots. The L Vans are expected to accumulate 250,000 kilometers of public road mileage by the end of 2023 as they are used to validate Arrival’s engineering designs and components. In recent months, the company has sharpened its focus on its U.S. product strategy and plans to invest the expected proceeds from the transaction in the production of its XL Van at its Charlotte, North Carolina factory. Start of production in Charlotte is targeted for late 2024. Based on 2022 financial data and an assumed post-transaction share price of 13c per ordinary share, the business combination values the combined business at an implied pro forma enterprise value of $524M. This assumes no redemptions by Kensington shareholders in connection with closing and the payment of estimated transaction expenses. It also excludes warrants, ordinary shares subject to share awards and options, and Arrival’s ongoing financing activities since December 31, 2022. The boards of directors of both Kensington and Arrival have approved the proposed transaction, which is expected to be completed in the second half of 2023, subject to, among other things, approval by Kensington’s and Arrival’s shareholders and the satisfaction or waiver of other conditions stated in the definitive documentation. Kensington has $283M of cash held in trust, before redemptions. Combined with Arrival’s cash on balance sheet as of December 31, 2022, the company would have approximately $468M of pro forma cash to fund its commercialization plans, including the build-out of its manufacturing facility in Charlotte, North Carolina. Kensington shareholders will receive, for every one Kensington ordinary share, an amount of newly issued shares equal to $17.00 divided by Arrival shares’ 10-day volume-weighted average price for the 10 days preceding the fourth day prior to Kensington’s shareholder meeting.