Battery electric (BEV) and fuel cell electric (FCEV) truck developer Nikola Motor Company (Nikola) has agreed to acquire California-based battery supplier Romeo Power in an all-stock transaction worth approximately USD 144 million. The deal values Romeo Power’s share at USD 0.74—a 34% premium to Romeo's closing share price on Friday. The deal is expected to close by this October and remains subject to regulatory approvals and customary closing conditions.

Nikola will also provide USD 35 million in interim funding to Romeo Power to continue operations through the transaction closure.

This vertical integration will give Nikola control over parts of its supply chain in relation to battery pack engineering and production. Through the acquisition, the company expects to generate annual cost savings of up to USD 350 million by 2026 and reduce battery pack costs by 30%–40% by the end of next year.

Romeo Power is a lithium-ion battery manufacturer specializing in commercial electric vehicle (EV) batteries. The company was founded by a team of ex-Tesla and SpaceX engineers. Romeo’s key customers include heavy-duty EV companies including Nikola, Phoenix Motorcars, Lightning System, and Lion Buses. The company was listed on the NYSE through a special purpose acquisition company (SPAC) merger in December 2020. The deal raised USD 384 million at a valuation of USD 1.3 billion at the time.