XL Fleet Agrees to Go Public Via Merger With Pivotal

(Bloomberg) -- XL Fleet, a company that makes systems to reduce fuel consumption, has agreed to go public through a merger with blank-check company Pivotal Investment Corp. II, according to people with knowledge of the matter.

The combined company will be worth about $1 billion, including debt, said one of the people, requesting anonymity because the deal isn’t yet public.

Pivotal has held talks with potential investors about raising $150 million in new equity for the deal, which could be announced as soon as Friday, one of the people said.

Pivotal’s shares rose more than 3% in late trading Thursday.

A Pivotal representative declined to comment while a representative for XL Fleet didn’t immediately respond to a request for comment.

Boston-based XL Fleet makes systems that are compatible with vehicles made by Ford Motor Co. and General Motors Co.’s Chevrolet, its website shows.

It helps companies with fleets of vehicles cut costs and lower emissions by providing parts that electrify certain functions. It also provides software that monitors vehicle performance. Customers include The Coca-Cola Co. and Verizon Communications Inc.

XL is forecasting that sales will more than triple next year to $75 million, according to one of the people.

The company, led by Chief Executive Officer Dimitri Kazarinoff and founder Tod Hynes, is backed by investors including Constellation Technology Ventures, the venture capital arm of Exelon Corp. Swedish furniture maker IKEA and OGCI Climate Investments are also backers.

Pivotal, a special purpose acquisition company backed by by Chief Executive Officer Jonathan Ledecky and Kevin Griffin’s MGG Investment Group LP, raised $230 million in an initial public offering last year.

Ledecky, a co-owner of the National Hockey League’s New York Islanders, has done blank-check deals before.

Last year, another Pivotal SPAC agreed to merge with data software company KLDiscovery Inc. In 2007, another Ledecky SPAC known as Endeavor Acquisition Corp. closed its merger with American Apparel Inc.

Blank-check companies are being raised at a rapid clip, in part because private companies have increasingly considered them as a viable alternative to an IPO, during which selling investors potentially leave some cash on the table in what’s known as a first-day pop.

©2020 Bloomberg L.P.