ANALYSIS: Auto Targets Outnumber All Others in Litigated SPACs

April 27, 2021, 9:01 AM

SPACs targeting electric vehicle and autonomous driving companies end up in litigation more often than those that do not. The first installment of this SPAC series focused on when plaintiffs were most likely to initiate litigation; this second installment highlights the acquisition target seen most often.

Auto-Related Targets Take the Lead

Combined research of Bloomberg Terminal data on completed SPAC mergers and Bloomberg Law Dockets data on SPAC-targeted lawsuits has revealed 36 lawsuits involving SPAC deals that were announced and closed in 2020 through Q1 2021. These cases involved 15 different acquisitions. Of those, 10 of the targets were auto industry-related, while the rest involved SPAC targets in commercial services–finance, computers, health insurance, and e-services. Only one other—commercial services-finance—appeared more than once.

These auto-related companies include Nikola Motor Co. LLC., Lordstown Motors Corp., XL Hybrids Inc., and Canoo Holdings Ltd. for cars and trucks as well as Romeo Systems Inc., Velodyne Lidar USA Inc., ChargePoint Inc., QuantumScape Corp., Hyliion Inc., and Aeva Inc. for EV batteries, charging stations, machinery, and auto parts.

Reviewing nearly 50 other acquisitions announced and completed during the same time period that did not wind up in litigation revealed that the most common target was software applications, followed by commercial services, and commercial services-finance. In this non-litigated group, only three appear to be related to vehicle technology or auto-retail—the majority of the auto-related acquisitions ended up in litigation, while no such trend was observed for other industry subgroups.

More to Come

Stay tuned for the final installment of the series, which will explore SPAC deal size, the time taken to identify a target, and whether either factor makes litigation more likely.

Bloomberg Law subscribers can find related content on our In Focus: Special Purpose Acquisition Companies resource.

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