Just months after being given a $12 million Modern Manufacturing Initiative grant from the federal government, carbon fibre wheel maker Carbon Revolution has been acquired by a US company via a stock swap.
If the deal with Twin Ridge Capital Acquisition Corporation goes ahead, Carbon Revolution will de-list from the Australian Stock Exchange, with plans for the merged entity to list on a US stock exchange.
Founded in 2007 with manufacturing operations in Geelong, Carbon Revolution has pioneered the manufacture of light-weight carbon fibre wheels for the car industry. Over the years, the company has received combined support from federal and state government programs valued in the tens of millions of dollars.
The latest support came through a $12 million grant under the Morrison government’s flagship Modern Manufacturing Initiative (MMI) announced by former Industry minister Angus Taylor in May, just days ahead of the federal election.
That $12 million MMI grant was to fund the first phase of a manufacturing expansion in Geelong called its Mega-Line project, boosting capacity by 75,000 wheels per year to 155,000.
The acquisition announcement on Wednesday makes no mention of the status of the Mega-Line project or the MMI funding.
The acquisition is presented as merger through Twin Ridge Capital as the US special purpose acquisition company. Upon closing the transaction, the shares of the merged company Poppetell Limited – to be renamed Carbon Revolution plc – are expected to be traded on a US national exchange.
Twin Ridge says the transaction would unlock investment capital to fund Carbon Revolution’s expansion of operations.
The structure of the deal would give Twin Ridge 57 per cent of the newly merged entity and current Carbon Revolution share holders 43 per cent. It gives the existing Carbon Revolution entity an implied value of about US$200 million.
According to the Australian Financial Review, this would give the existing Carbon Revolution a notional share price value of $1.41.
But news of the deal on Wednesday sent the Carbon Revolution shareprice tumbling 50 per cent to 19 cents – largely on the news that the company would need to find $30 million in bridging finance between now and the deal closing in the June quarter next year.
Carbon Revolution listed on the ASX in 2019 at $2.60.
The company has been a darling of the advanced manufacturing industry and the poster-child for the resurgence of Geelong as a manufacturing centre.
Carbon Revolution has been a supplier of carbon fibre wheels to the performance and premium end of the market with cars that include Ford’s GT and Shelby Mustang GT350R and GT500, Ferrari’s 488 Pista, F8 Tributo, SF90 Stradale, 812 Competizione and 296 GTB, Renault’s Megane RS Trophy R, and more recently GM’s Chevrolet Corvette Z06.
Ford has recently announced an additional program with its 2024 Mustang Dark Horse.
In addition to its most recent $12 million MMI grant, Carbon Revolution has also been the beneficiary of a $10 million equity investment from the Clean Energy Finance Corporation, and $27 million lifeline from the Victorian government as a loan to cover cashflow headaches ahead of its 2019 listing.
Carbon Revolution has been a pioneer in advanced manufacturing of composites in the automative industry. If the acquisition moves ahead and the company leaves for the US, it will take with it 89 patents (either granted or pending) on next-generation auto technology that the company says is years ahead of the competition.
Update: A previous version of this story said Carbon Revolution would move its headquarters to Florida in the United States as part of the deal. This is not the case.
Do you know more? Contact James Riley via Email.