- Transaction values ECARX at $3.82 billion professional forma fairness price, or pre-money fairness price of $3.4 billion
- Assumes $300 million money held in believe by way of COVA Acquisition Corp. and contains $45 million in more capital from strategic companions, Geely Protecting Staff and Luminar, and convertible notice holder Lotus Era
- Proceeds from the transaction will allow ECARX to boost up its generation advancement and product roll-out, strategic acquisitions and investments, and global growth
- Confirmed monitor file of luck serving 12 OEM manufacturers, together with the Geely Auto Staff, Lotus, Mercedes-Benz, Proton and good, and 8 Tier 1 car providers international; ECARX generated $436 million in income in 2021
- Robust income enlargement anticipated from steady product advancement and supply of full-stack mobility tech resolution that can allow enhanced person reports as world automakers boost up the release of latest hooked up vehicles, underpinned by way of expanding ranges of car intelligence
SAN FRANCISCO, Might 26, 2022 /PRNewswire/ — ECARX Holdings, Inc. (“ECARX”), an international mobility tech corporate, has entered right into a merger settlement with COVA Acquisition Corp. (“COVA”) and upon of entirety of the transaction expects to be indexed on Nasdaq beneath ticker image “ECX”. The remaining of the transaction is anticipated to happen within the fourth quarter of 2022.
ECARX develops {hardware} and instrument answers which can be very important for the improvement of hooked up, automatic and electrified mobility, which it provides to the worldwide car business because it swiftly transforms to fulfill evolving shopper calls for. Over the past 3 years, ECARX’s generation has been built-in into greater than 3.2 million vehicles international.
As a pace-setter within the design, advancement and supply of clever car generation, ECARX is poised to have the benefit of the shift against totally electrical platforms, hooked up vehicles, and automatic riding applied sciences. As automakers broaden new car platforms for those rising traits, digital elements are anticipated to constitute a better portion of the product price on those new platforms as instrument additional allows onboard reports and insist for complex computing merchandise like the ones produced by way of ECARX is anticipated to upward push considerably over the following decade. Moreover, ECARX’s strategic OEM collaborations, ranging from the early levels of a car’s advancement cycle, give you the skill to ship a quick, tough product roadmap and to construct an car generation platform that easiest meets consumers’ wishes.
ECARX was once co-founded in 2017 by way of Ziyu Shen, Chairman and CEO, and by way of Eric Li (Li Shufu), the corporate’s biggest investor. Mr. Li may be the founder and chairman of the Zhejiang Geely Protecting Staff Co., Ltd. (“Geely”), one of the most biggest car teams on the planet. Since inception, ECARX has benefited from its connection and privileged get right of entry to to Geely and has enlargement doable inside the Geely ecosystem, which contains Geely Automotive Holdings Restricted (“Geely Auto”), together with the Geely, Geometry, Lynk & Co, and Zeekr manufacturers, in addition to Lotus, Proton, good, Volvo Vehicles, and different OEMs which can be affiliated with Geely or by which this is a long-term shareholder.
Control Statement
Ziyu Shen, Co-founder, Chairman and CEO of ECARX:
“The worldwide auto business is experiencing the quickest transformation in its historical past – the technology of interior combustion engines and horsepower is over. We imagine car DNA will turn out to be extra within the subsequent decade than it has previously hundred years, and this shift will pressure an intensive exchange in OEM car advancement, calling for all-new platforms, complex computing energy and steady over-the-air instrument updates. ECARX’s vertically built-in, full-stack car computing platform and underlying core applied sciences are designed to assist meet this evolving call for head-on. COVA’s management workforce has an outstanding monitor file backing top enlargement ventures, and we stay up for unlocking partnerships and paths for collaboration to boost up advancement of next-generation applied sciences.”
Jun Hong Heng, Chairman of the Board and CEO of COVA:
“Guided by way of the ambitions of co-founders Ziyu Shen and Eric Li (Li Shufu), ECARX is construction on its sturdy basis to forge new runways for enlargement each inside of China and the world over because it continues to scale. ECARX suits squarely into our means and funding philosophy, which makes a speciality of industries being disrupted by way of advances in generation and synthetic intelligence. In combination, we can create innovative answers to form the way forward for mobility.”
Eric Li (Li Shufu), Co-founder and Biggest Investor of ECARX:
“ECARX is a pureplay corporate involved in clever generation, and its luck speaks volumes in regards to the stage of focal point and execution that the workforce brings to its consumers and companions. I am particularly excited that the corporate is taking steps to improve its Ecu marketplace presence, whilst accelerating its global growth plans via its partnership with COVA.”
Key Funding Highlights
ECARX is well-positioned to grasp the expansion alternative introduced by way of the speedy transition of the automobile business to completely hooked up and independent electrified cars. Subsequent-generation cars would require complex computing processing energy pushed by way of central computing purposes, controlling primary techniques for secure assisted riding, infotainment, over-the-air-updates, data-management and motive force/passenger communications.
- Robust, established buyer base with rising income streams – ECARX works along world manufacturers in a extremely built-in manner from the early levels within the product cycle to spot traits and plan, pilot and take a look at differentiated answers that allow and improve the onboard enjoy. Via its deep reference to Geely and the Geely ecosystem, ECARX has present industry relationships with primary OEM manufacturers.
- Distinctive product advancement and go-to-market methods – ECARX advantages from strategic relationships that create tough pathways to 3rd birthday celebration OEMs and global enlargement, with more than one advancement and commercialization alternatives. Via its privileged get right of entry to to Geely in addition to its joint ventures and strategic co-development partnerships that facilitate capital environment friendly product advancement, ECARX has unheard of business perception that speeds up and informs its long run product pipeline.
- Powerful product roadmap – ECARX’s world-class engineers have a transparent platform roadmap consisting of a blended Device-on-a-Chip (SoC) core modules and a flexible Running Device (OS) that simplify and accelerate product advancement. Lately beneath advancement is an car central computing platform, an working gadget and instrument to ship the virtual cockpit, complex driver-assistance techniques (ADAS) and unsupervised riding (AD) and practical protection answers. Maximum not too long ago, the corporate signed a collaboration settlement with Luminar to additional advance its ADAS and AD applied sciences.
- Confirmed file of luck – ECARX is led by way of a seasoned leadership workforce with deep global business enjoy. Since its founding, the corporate has grown to serve 12 OEM manufacturers, together with the Geely Auto Staff, Lotus, Mercedes-Benz, Proton and good, and 8 Tier 1 car providers international. There may be plentiful runway for enlargement inside of China and the world over as ECARX scales and expands its world succeed in.
- Transparent trail to profitability – ECARX is anticipated to reach adjusted EBITDA profitability by way of the top of 2024, pushed basically by way of speedy top-line enlargement from its present and rising buyer base, speedy execution of its tough generation advancement roadmap, and global growth.
Transaction Evaluation
The transaction represents a blended corporate professional forma fairness price of roughly $3.82 billion, assuming no redemptions by way of COVA’s shareholders. It contains $300 million money held in believe by way of COVA Acquisition Corp. in addition to $45 million in more capital from strategic companions, Geely Protecting Staff and Luminar, and convertible notice holder Lotus Era. After the remaining of the merger, ECARX’s present shareholders are anticipated to possess roughly 89% of the professional forma blended corporate, assuming no redemptions by way of COVA’s shareholders. COVA sponsor and controlling shareholders of ECARX have agreed to a 6-month lock-up. The Chairman of the Board and CEO of COVA, Mr. Heng, will sign up for ECARX’s Board of Administrators, and COVA will appoint one unbiased director upon remaining.
The Forums of Administrators of ECARX and COVA have unanimously licensed the transaction. The transaction would require the approval of the shareholders of each ECARX and COVA and is topic to different standard remaining prerequisites, together with the receipt of positive regulatory approvals. The transaction is anticipated to near within the fourth quarter of 2022.
Proceeds from the transaction might be used to boost up generation advancement and the roll-out of latest merchandise, improve strategic acquisitions or investments, in addition to create additional pathways for world enlargement via its global operations workplace in London and a product advancement middle in Gothenburg, Sweden.
Further details about the proposed transaction, together with a duplicate of the merger settlement and investor presentation, might be supplied in a Present File on Shape 8-Okay to be filed by way of COVA with the Securities and Trade Fee (“SEC”) and might be to be had at the ECARX investor family members site at ir.ecarxgroup.com and at www.sec.gov.
Advisors
UBS AG Hong Kong Department(1) and Morgan Stanley Asia Restricted acted as joint monetary advisors to ECARX. Skadden, Arps, Slate, Meagher & Flom acted as global felony recommend to ECARX. Cantor Fitzgerald & Co. acted as capital markets consultant to COVA Acquisition Corp., and Orrick, Herrington & Sutcliffe LLP acted as its felony recommend.
About ECARX
ECARX is remodeling cars into seamlessly built-in knowledge, communications and transportation gadgets. It’s shaping the interplay between other people and vehicles by way of swiftly advancing the generation on the middle of good mobility. ECARX’s present core merchandise come with infotainment head gadgets (IHU), virtual cockpits, car chip-set answers, a core working gadget and built-in instrument stack. Past this, ECARX is creating a full-stack car computing platform. Over the past 3 years, ECARX’s generation has been built-in into greater than 3.2 million vehicles international. ECARX was once based in 2017 and has since grown to over 2,000 workforce participants, with amenities in China and Europe. The co-founders are two car marketers, Chairman and CEO Ziyu Shen and Eric Li (Li Shufu), who may be the founder and chairman of Zhejiang Geely Protecting Staff (Geely), one of the most biggest car teams on the planet that holds possession passion and funding in global manufacturers reminiscent of Lotus, Lynk & Co, Polestar, good and Volvo Vehicles.
About COVA
COVA Acquisition Corp. is a clean take a look at corporate whose industry objective is to impact a merger, amalgamation, percentage trade, asset acquisition, percentage acquire, reorganization or equivalent industry aggregate with a number of companies or entities.
Ahead-Having a look Statements
This press liberate incorporates forward-looking statements inside the which means of Segment 27A of the Securities Act and Segment 21E of the Trade Act which can be in accordance with ideals and assumptions and on knowledge recently to be had to COVA and ECARX.
All statements as opposed to statements of historic reality contained on this press liberate are forward-looking statements. In some instances, you’ll establish forward-looking statements by way of the next phrases: “might,” “will,” “may just,” “would,” “must,” “be expecting,” “intend,” “plan,” “look ahead to,” “imagine,” “estimate,” “are expecting,” “undertaking,” “doable,” “proceed,” “ongoing,” “goal,” “search” or the adverse or plural of those phrases, or different equivalent expressions which can be predictions or point out long run occasions or possibilities, despite the fact that no longer all forward-looking statements include those phrases. Those statements are based totally upon estimates and forecasts and replicate the perspectives, assumptions, expectancies, and evaluations of COVA and ECARX, which contain dangers, uncertainties and different elements that can purpose exact effects, ranges of process, efficiency or achievements to be materially other from the ones expressed or implied by way of those forward-looking statements. This type of estimates, assumptions, expectancies, forecasts, perspectives or evaluations, whether or not or no longer known on this press liberate, must be considered initial and for illustrative functions handiest and must no longer be relied upon as being essentially indicative of long run effects. Even though every of COVA and ECARX believes that it has a cheap foundation for every forward-looking remark contained on this press liberate, every of COVA and ECARX warning you that those statements are in accordance with a mixture of details and elements recently recognized and projections of the longer term, which might be inherently unsure. As well as, there might be dangers and uncertainties described within the proxy remark/prospectus on Shape F-4 on the subject of the proposed transaction, which is anticipated to be filed by way of ECARX with the SEC and different paperwork filed by way of COVA or ECARX now and again with the SEC. Those filings might establish and cope with different essential dangers and uncertainties that would purpose exact occasions and effects to fluctuate materially from the ones expressed or implied within the forward-looking statements. Neither COVA nor ECARX can guarantee you that the forward-looking statements on this press liberate will end up to be correct. Those forward-looking statements are topic to various dangers and uncertainties, together with the facility to finish the industry aggregate because of the failure to acquire approval from COVA shareholders or fulfill different remaining prerequisites within the merger settlement, the prevalence of any match that would give upward push to the termination of the merger settlement, the facility to acknowledge the predicted advantages of the industry aggregate, the volume of redemption requests made by way of COVA public shareholders, prices associated with the transaction, the have an effect on of the worldwide COVID-19 pandemic, the chance that the transaction disrupts present plans and operations because of the announcement and consummation of the transaction, the result of any doable litigation, govt or regulatory complaints and different dangers and uncertainties, together with the ones to be integrated beneath the heading “Chance Elements” within the registration remark on Shape F-4 to be filed by way of ECARX with the SEC and the ones integrated beneath the heading “Chance Elements” within the ultimate prospectus of COVA dated February 4, 2021 and in its next filings with the SEC. In gentle of the numerous uncertainties in those forward-looking statements, you must no longer regard those statements as a illustration or guaranty by way of COVA or ECARX, their respective administrators, officials or workers or some other person who COVA or ECARX will succeed in their targets and plans in any specified period of time, or in any respect. The forward-looking statements on this press liberate constitute the perspectives of COVA and ECARX as of the date of this press liberate. Next occasions and tendencies might purpose the ones perspectives to modify. Alternatively, whilst COVA and ECARX might replace those forward-looking statements at some point, COVA and ECARX in particular disclaim any legal responsibility to take action, aside from to the level required by way of acceptable legislation. You must, subsequently, no longer depend on those forward-looking statements as representing the perspectives of COVA and ECARX as of any date next to the date of this press liberate. Accordingly, undue reliance must no longer be positioned upon the forward-looking statements.
This press liberate incorporates financial forecasts for ECARX with recognize to positive of its financial effects for the fiscal years 2022 via 2024 for illustrative functions. Neither COVA nor ECARX’s unbiased auditors have audited, studied, reviewed, compiled or carried out any procedures with recognize to the projections for the aim in their inclusion on this press liberate, and accordingly, they didn’t specific any opinion or supply some other type of assurance with recognize thereto for the aim of this press liberate. Those projections are forward-looking statements and must no longer be relied upon as being essentially indicative of long run effects. On this press liberate, positive of the above-mentioned projected knowledge has been supplied for functions of offering comparisons with historic information. The assumptions and estimates underlying the potential financial knowledge are inherently unsure and are topic to all kinds of significant industry, financial and aggressive dangers and uncertainties that would purpose exact effects to fluctuate materially from the ones contained within the potential financial knowledge. Whilst such knowledge and projections are essentially speculative, COVA and ECARX imagine that the preparation of potential monetary knowledge comes to more and more upper ranges of uncertainty the additional out the projection extends from the date of preparation. Accordingly, there may also be no assurance that the potential effects are indicative of the longer term efficiency of ECARX or that exact effects won’t fluctuate materially from the ones introduced within the potential financial knowledge. The inclusion of potential financial knowledge on this press liberate must no longer be considered a illustration by way of any individual that the effects contained within the potential financial knowledge might be accomplished. All next written and oral forward-looking statements regarding COVA or ECARX, the merger or different issues and as a consequence of COVA or ECARX or any individual performing on their behalf are expressly certified of their entirety by way of the cautionary statements above.
Non-GAAP Monetary Measures
This press liberate additionally contains references to non-GAAP monetary measures reminiscent of adjusted EBITDA. Such non-GAAP measures must be thought to be handiest as supplemental to, and no longer as awesome to, monetary measures ready according to GAAP. COVA and ECARX imagine those non-GAAP measures of financial effects supply helpful knowledge to leadership and traders relating to positive financial and industry traits on the subject of ECARX’s financial situation and result of operations. COVA and ECARX imagine that using those non-GAAP financial measures supplies an extra instrument for traders to make use of in comparing ongoing working effects and traits in and in evaluating the ECARX’s financial measures with different equivalent firms, lots of which provide equivalent non-GAAP financial measures to traders. Control does no longer believe those non-GAAP measures in isolation or as a substitute for monetary measures decided according to GAAP. Those non-GAAP financial measures are topic to inherent boundaries as they reflect the workout of judgments by way of leadership about which expense and source of revenue are excluded or integrated in figuring out those non-GAAP financial measures. Moreover, to the level that forward-looking non-GAAP monetary measures are supplied, they’re introduced on a non-GAAP foundation with out reconciliations of such forward-looking non-GAAP measures because of the inherent problem in forecasting and quantifying positive quantities which can be essential for such reconciliation.
Necessary Further Data In regards to the Transaction Will Be Filed With the SEC
In reference to the proposed transaction, ECARX will document a registration remark on Shape F-4 with the SEC that can come with a prospectus with recognize to ECARX’s securities to be issued in reference to the proposed transaction and a proxy remark with recognize to the shareholder assembly of COVA to vote at the proposed transaction. Shareholders of COVA and different individuals are inspired to learn, when to be had, the initial proxy remark/prospectus in addition to different paperwork to be filed with the SEC as a result of those paperwork will include essential details about COVA and ECARX and the proposed transaction. After the registration remark is said efficient, the definitive proxy remark/prospectus to be integrated within the registration remark might be mailed to shareholders of COVA as of a file date to be established for vote casting at the proposed transaction. As soon as to be had, shareholders of COVA may also be capable to download a duplicate of the F-4, together with the proxy remark/prospectus, and different paperwork filed with the SEC for free of charge, by way of directing a request to: COVA Acquisition Corp., 530 Bush Side road, Suite 703 San Francisco, California 94108. The initial and definitive proxy remark/prospectus to be integrated within the registration remark, as soon as to be had, may also be bought, for free of charge, on the SEC’s site (www.sec.gov).
Individuals within the Solicitation
COVA and ECARX and their respective administrators and government officials could also be thought to be individuals within the solicitation of proxies with recognize to the possible transaction described on this press liberate beneath the foundations of the SEC. Details about the administrators and government officials of COVA and their possession is about forth in COVA’s filings with the SEC. More information in regards to the individuals who might, beneath the foundations of the SEC, be deemed individuals within the solicitation of COVA’s shareholders in reference to the possible transaction might be set forth within the registration remark containing the initial proxy remark/prospectus when it’s filed with the SEC. Those paperwork are to be had without spending a dime on the SEC’s site at www.sec.gov or by way of directing a request to COVA Acquisition Corp., 530 Bush Side road, Suite 703 San Francisco, California 94108.
No Be offering or Solicitation
This press liberate isn’t a proxy remark or solicitation of a proxy, consent or authorization with recognize to any securities or in recognize of the possible transaction and does no longer represent an be offering to promote or a solicitation of an be offering to shop for any securities of COVA or ECARX, nor shall there be any sale of such a securities in any state or jurisdiction by which such be offering, solicitation or sale can be illegal previous to registration or qualification beneath the securities rules of such state or jurisdiction. No be offering of securities will be made aside from by way of a prospectus assembly the necessities of the Securities Act.
(1) UBS AG is included in Switzerland with restricted legal responsibility
SOURCE ECARX Holdings, Inc.
