Shares of Harley-Davidson (HOG) - Get Harley-Davidson, Inc. Report jumped after the motorcycle maker said that its LiveWire electric motorcycle division would go public by merging with special-purpose-acquisition company AEA-Bridges Impact (IMPX) .
The LiveWire deal indicates the enterprise value of the division at $1.77 billion. The company says it expects proceeds of $545 million from the deal.
Harley-Davidson shares at last check were 14% higher at $42.0. IMPX shares were 4.1% higher at $10.25.
"This transaction will give LiveWire the freedom to fund new product development and accelerate its go-to-market model," Harley-Davidson Chief Executive Jochen Zeitz said in a statement.
"LiveWire will be able to operate as an agile and innovative public company while benefitting from the at-scale manufacturing and distribution capabilities of its strategic partners."
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The deal will be funded by AEA-Bridges' $400 million cash held in trust and another $100 million investment each from Harley-Davidson and Taiwanese motorcycle maker Kymco.
At closing, Harley will retain a 74% equity stake in the new company with ABIC shareholders owning 17% and AEA-Bridges' founders and Kymco getting 4% each.
LiveWire would become the first publicly traded EV motorcycle company in the U.S. The division was previously seen as an integral part of the Milwaukee parent's 2021-25 strategic plan to achieve long-term profitable growth.
Zeitz will be chairman of LiveWire for as long as two years after the deal closes.
The combined company is expected to have an enterprise value of about $1.77 billion and post-money equity value of about $2.31 billion at closing.
SPACs, or blank-check companies, are formed for the express purpose of finding and merging with an operating partner. The idea is to speed the operating company to the public markets and avoid the extended process of a traditional initial public offering.