REE Automotive Ltd. REE, a commercial EV developer and manufacturer, and Motherson Group, a manufacturer of automotive components, have announced a strategic agreement. Under this contract, Motherson will handle the sourcing and supply chain management for production parts and assist REE in assembling REEcorner and REE P7 electric trucks, the first fully by-wire, software-driven medium-duty electric trucks, on the market. Additionally, Motherson will nominate a director to join REE’s board.
In conjunction with this contract, REE has secured agreements with investors, including M&G Investments, Motherson and Varana Capital, for the sale of approximately 11 million Class A ordinary shares at $4.122 per share for $45.35 million in gross proceeds. The funds will be used for general working capital and the offering is expected to close by Sept. 19, 2024, pending customary conditions.
M&G Investments led the investment with $20 million, followed by Motherson’s $15 million contribution. Upon closing, M&G will own around 16% of REE’s outstanding shares, Motherson will hold 19% on a non-diluted basis, and Varana Capital will hold 8%.
Through this partnership, REE will leverage Motherson's buying power, manufacturing expertise and industry connections to accelerate production in response to growing demand from major multinational customers. REE’s software-driven medium-duty electric trucks are positioned to meet the anticipated transition of more than 240,000 trucks to electric power in the United States alone, with an even larger market globally. The collaboration allows REE to focus on expanding its customer base, increasing orders, improving gross and cash flow margins and enhancing its patent portfolio.
Per Daniel Barel, co-founder and CEO of REE, the partnership will help the company overcome many production challenges. Motherson's worldwide presence and manufacturing expertise, combined with REE's focus on technology and innovation, will provide significant advantages to both the companies’ customers and investors. Sullivan & Worcester LLP represented REE concerning matters relating to U.S. law while Herzog Fox & Neeman represented it with respect to matters relating to Israeli law.
Zacks Rank & Key Picks
REE currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the auto space are Dorman Products, Inc. DORM, Blue Bird Corporation BLBD and Douglas Dynamics, Inc. PLOW, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.71% and 35.46%, respectively. EPS estimates for 2024 and 2025 have improved 51 cents and 37 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for BLBD’s 2024 sales and earnings suggests year-over-year growth of 17.58% and 215.89%, respectively. EPS estimates for 2024 and 2025 have improved 65 cents and 80 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for PLOW’s 2024 earnings suggests year-over-year growth of 60.4%. EPS estimates for 2024 have improved 15 cents in the past 60 days.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
