NEW YORK, NY-JUNE 23: Harley Davidson riders reveal Project LiveWire , the first electric Harley Davidson motorcycle during a special ride across the iconic Manhattan Bridge on June 23, 2014 in New York City. (Photo by Neilson Barnard/Getty Images for Harley Davidson) GETTY IMAGES
Forbes / Bill Roberson
2021 12 13
The quest to get the once dominant American motorcycle maker Harley-Davidson back on track took an unusual but not altogether unexpected turn Monday with the revelation that the company’s new electric motorcycle brand,LiveWire, will go public with a SPAC deal i n the near future.
No specific date for a public offering was listed and the deal is subject to the SPAC
company shareholders approval, but a press release did say that LiveWire, which was spun off by Harley-Davidson as its own brand just recently, will partner with sustainability focused special purpose acquisition company AEA Bridges Impact Corporation (aka ABIC) for the listing as LVW on the New York Stock Exchange.
ABIC is listed under the stock symbol IMPX.
Additionally, KYMCO, based in Taiwan, is also part of the deal. KYMCO makes a
wide range of scooters, light motorcycles, ATVs and other motorized devices and
sells them in countries around the world, including in the U.S., where they are best
known for their scooters. KYMCO’s U.S. headquarters are in South Carolina.
According to the press release, “funding for LiveWire will consist of ABIC’s $400
million cash held in trust, a $100 million investment from Harley Davidson, and a
$100 million investment from KYMCO, through a PIPE (private investment in
public equity).” Once public, “Harley Davidson will retain an equity in terest in the
Company of approximately 74%, ABIC’s shareholders will own approximately 17%,
and ABIC’s founders and KYMCO will own approximately 4% each.”
If completed, the deal could give LiveWire an “enterprise value of approximately
$1.77 billion and po st money equity value of approximately $2.3 billion at closing,”
according to the press release issued Monday morning. Harley Davidson had a
market cap of $6 billion during mid day trading Monday.
“Today’s announcement is a historic milestone with LiveWire set to become
the first publicly traded EV motorcycle company in the U.S. By building on Harley
Davidson’s 118 year lineage, LiveWire’s mission is to be the most desirable
electric motorcycle brand in the world, leading the electrification of the sport,”
Harley Davidson CEO Jochen Zeitz said in the press release. “This transaction will
give LiveWire the freedom to fund new product development and accelerate its
go to market model. LiveWire will be able to operate as an agile and innovative
public company while benefiting from the at scale manufacturing and distribution
capabilities of its strategic partners, Harley Davidson and KYMCO.”
Analysis
There has a been a lot of focus on newCEO Jochen Zeitz, who was on Harley’s
board before he transitioned to CEO in March of 2020 just as the pandemic
began. Harley Davidson was suffering through consecutive quarters of sliding
earnings, sales declines and loss of market share. An aging but dedicated central
demographic, expensive products that were seen by many in the larger motorcycle community as high in quality but technologically outdated and a general overall decline in the number of people seeming interested in motorcycle of any brand or type had some people forecasting a possible end of Harley Davidson, or the loss of its independenc e in a possible sale.
Over 50 years ago, the iconic motorcycle maker ended up in the hand of
recreational equipment maker AMF, where it foundered nearly into insolvency
before a last gasp buyback by company principals. The company reinvented and
refined ke y parts of their motorcycles and the brand went public (HOG) in 1986.
From there, continued modernization efforts and product refinement led Harley
Davidson to one of the greatest comebacks in American business history, but the
recent years have not been k ind, despite H D making excellent motorcycles this
author has reviewed.
However, Zeitz, who hails from Germany, had successfully brought sports apparel
maker Puma back from the brink before joining Harley’s board, and it was hoped
he could work some of th e same magic in Milwaukee. Upon taking the reins, Zeitz
followed through on former CEO Matt Levatich’s efforts to bring a controversial
but well timed new motorcycle to term earlier this year, and the Pan America adventure bike has been a breakout hit for the company (disclosure: I am currently
reviewing the Pan America for Forbes.com).
That launch followed another controversial step for Harley under Levati
ch: The debut of the LiveWire all electric motorcycle in 2019. Perhaps as a precursor to
the LiveWire plan, in late 2020, Harley Davidson announced that its newly
announced electric bicycles would be spun off as its own brand, Serial 1, a name
taken from t he first motorcycle Harley Produced in 1903.
Harley-Davidson was the first (and perhaps most unlikely) major legacy bike
maker to launch a full size, full powered electric motorcycle in the industry and
still is, as of this writing. However, they have s trong competition from Zero Motors,
who began as a clean sheet electric motorcycle maker over 15 years ago and
produces a wide range of well regarded electric motorcycles, all of which are less
expensive than the LiveWire model, which is now known as the L iveWire One
under the LiveWire brand
While taking LiveWire public with a SPAC is surprising, the inclusion of Taiwan
based scooter maker KYMCO in the deal is perhaps more so but it also makes
sense. While relatively unknown in the U.S., KYMCO is a jugg ernaut outside
America, selling hundreds of thousands of machines many of them quite
sophisticated-across Europe and Asia. Pairing with KYMCO gives LiveWire (and
by extension, Harley Davidson) an easier entry into Eurasian market places with
what may b e a simple rebrand of KYMCO products as LiveWire machines, while
also putting KYMCO’s massive R&D and production capabilities for new products
especially all electric machines within reach.
Electric scooters are already commonplace and are growing in popularity in many
cities worldwide. While breaking through with a full size electric motorcycle is a
tall order due to the much higher expectations of motorcycle riders, spooling up
competent scooters especially electric models is much lower hanging f ruit.
The prices are much lower and buyers aren’t expecting supercar levels of
performance. Mostly, they need their machines to be reliable, affordable and
practical in terms of transporting riders through large cities, where electrical
charging infrastruc ture or battery swapping technology is already largely in
place. With LiveWire essentially separated from Harley Davidson’s branding, the
Motor Company could be in the mix in a massive, worldwide electric motorcycle
and scooter marketplace far, far bey ond what they could have hoped for in terms
of their large, gas powered legacy machines, which will continue to be popular in
the U.S.
Spinning off LiveWire had sparked talk of Harley Davidson doing the same with
the Pan America motorcycles as well, but t hey perhaps cleave a bit more tightly
to the mothership than the LiveWire and Serial 1 platforms. Harley Davidson
shares spiked sharply on the LiveWire news but has since returned most of those
gains.