Electric Car Co.’s $2.4B Deal Was Built On Lies, Investor Says
Lauren Berg, 05 April 2021
In the midst of its $2.4 billion merger with blank-check company Hennessy Capital, electric car maker Canoo waited until after the market closed to tell investors it was changing its business focus, causing its stock to plummet, according to a proposed class action filed Friday in California federal court.
In December, Los Angeles-based Canoo Holdings Ltd. went public in a merger with Hennessy Capital Acquisition Corp., but didn’t tell investors it was turning its focus away from the plan to sell vehicles through a subscription model and that it was de-emphasizing its engineering services business, according to the complaint filed by investor Justin Kojak.
The company also didn’t tell investors that, contrary to prior statements, Canoo didn’t have partnerships with original equipment manufacturers and no longer took part in a previously announced partnership with Hyundai, Kojak said.
Instead, Canoo waited until March 29 after the market closed to say the company would no longer focus on business lines that it had touted in merger documents just three months earlier and “formed the basis of Canoo’s growth story,” according to the suit. That news resulted in the company’s stock price falling $2.50, or 21%, to close at $9.30 on March 30, the suit states.
