MESA, Ariz. - Nxu, Inc. (NASDAQ: NXU), a technology company specializing in energy storage and charging solutions, and Verde Bioresins, Inc., a sustainable bioplastics producer, announced a definitive merger agreement. The all-stock transaction will see Nxu acquiring Verde, with the merged entity to be named Verde Bioresins, Corp. and traded on Nasdaq under the ticker VRDE.
The boards of both companies have unanimously approved the merger, recommending their shareholders to do the same. Verde Bioresins has developed PolyEarthylene™, a proprietary bioresin that could serve as an alternative to petroleum-based plastics. This innovation is poised to disrupt the plastics industry with its economic feasibility and compatibility with existing manufacturing processes.
Brian Gordon, President of Verde, expressed enthusiasm for the merger with Nxu, highlighting the potential integration of PolyEarthylene resins into Nxu's electric vehicle (EV) charging systems. Nxu's Founder and CEO, Mark Hanchett, also conveyed optimism about the merger's potential to create value for shareholders and impact the plastics market.
Upon completion of the merger, expected to close in the first quarter of 2025, pre-merger Verde stockholders will own approximately 95% of the combined company, while Nxu stockholders will own around 5%. The board of directors will consist of seven members, predominantly from Verde, and Verde's management will oversee operations.
The transaction is contingent upon shareholder approval from both companies and other customary closing conditions. Verde's controlling shareholder, Humanitario Capital, LLC, along with Nxu's leadership, have agreed to support the merger, with Humanitario also entering a lock-up agreement restricting share transfers post-merger.
Nxu's exploration of strategic alternatives, initiated in April 2024, led to the selection of Verde as a merger candidate, with the aim of optimizing assets and generating sustained shareholder value. Advisors involved in the transaction include Lake Street Capital Markets, LLC, and Roth Capital Partners, LLC, providing financial guidance, while Snell & Wilmer L.L.P. and Wilmer Cutler Pickering Hale and Dorr LLP are serving as legal counsel.
Nxu shareholders seeking more information about the merger can contact the company directly. The transaction details will be filed with the SEC, including a Registration Statement and Proxy Statement/Prospectus, which shareholders are urged to read when available.
This merger announcement is based on a press release statement and contains forward-looking statements subject to risks and uncertainties.
In other recent news, Nxu, Inc. is facing potential delisting from NASDAQ due to non-compliance with audit committee requirements. The issue arose following the non-re-election of director Caryn Nightengale, which left a vacancy in the audit committee. Nxu, Inc. is actively seeking to appoint an independent director to fill the vacancy and achieve compliance before the deadline set by NASDAQ.
In other developments, Nxu, Inc. has approved amendments to its stock and officer compensation plans. The company's shareholders have approved an amendment to Nxu's Certificate of Incorporation, enabling the company to adjust the number of authorized shares and to enact reverse stock splits under certain conditions. Additionally, the stockholders endorsed the amendment and restatement of the Nxu, Inc. 2023 Omnibus Incentive Plan, increasing available shares for issuance by 48 million and extending the award grant period until 2034.
Nxu, Inc. has also made significant changes to its corporate bylaws, notably lowering the quorum requirement for shareholder meetings from a majority to one-third of the total voting power of shares issued. This strategic decision is aimed at facilitating the convening of shareholder meetings and enhancing operational flexibility.
Finally, Nxu, Inc. has announced the rollout of a subscription plan for its NxuOne™ EV Charging System. For a monthly fee, subscribers gain unlimited access to a high-powered public charging station in the Phoenix metro area. This initiative, leveraging Nxu's proprietary technology, aims to offer a cost-effective charging solution for a variety of EV brands.
InvestingPro Insights
As Nxu Inc. (NASDAQ: NXU) prepares for its merger with Verde Bioresins, InvestingPro data provides additional context to the company's financial situation. With a market capitalization of just $3.05 million, Nxu is currently operating as a small-cap company in the energy storage and charging solutions sector.
The company's financial metrics reveal some challenges. Nxu's revenue for the last twelve months as of Q2 2024 stood at $0.51 million, with a gross profit margin of -101.58%. This negative margin, coupled with an operating income of -$30.47 million, indicates that the company has been struggling with profitability.
InvestingPro Tips highlight that Nxu holds more cash than debt on its balance sheet, which could provide some financial flexibility during the merger process. However, the company is also quickly burning through cash, which may explain the strategic decision to merge with Verde Bioresins.
The stock's performance has been notably weak, with a year-to-date price total return of -89.12% as of the latest data. This aligns with another InvestingPro Tip noting that the stock price has fallen significantly over the last year.
Investors considering this merger should note that analysts anticipate sales growth for Nxu in the current year, according to InvestingPro Tips. However, they do not expect the company to be profitable this year, which underscores the importance of the merger in potentially turning around Nxu's financial situation.
For a more comprehensive analysis, InvestingPro offers 15 additional tips for Nxu, providing deeper insights into the company's financial health and market position as it approaches this transformative merger.
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