GM Extends Negotiations on $2 Billion Partnership Following Sexual Assault, Fraud Claims Against Nikola Founder
In the beginning of September, General Motors announced it will be making a grand entrance into the EV market by partnering with truck-maker Nikola, which would give the Detroit automaker an 11% stake in the company in exchange for a supply of batteries and fuel cell technologies. Although the deal was initially hailed as a significant achievement by Wall Street, the situation quickly soured several days later.
Days after the announcement, Hindenburg Research revealed a damning report that accused Nikola’s founder and executive chairman Trevor Milton of falsely reporting the company’s technological advancements in order to gain investor attention and partnerships. Although Milton dismissed the report’s claims, he did eventually resign on September 21, which then lead to slew of inquiries by the Department of Justice and the Securities and Exchange Commission.
This sudden negative attention ultimately caused Nikola’s shares to fall by more than 60% since the announcement of the deal – making the partnership significantly less favourable for GM. However, the troubles for Nikola did not stop there. Shortly after Milton’s resignation, two women have filed sexual assault claims against the EV company’s founder, accusing him of assaults dating back more than 15 years ago. Nonetheless, both the fraud claims and sexual assault allegations have prompted a series of concerns regarding GM’s allegedly poor due diligence before agreeing to the partnership.
As a result, it is no longer anticipated that the two companies will finalize the $2 billion partnership before Wednesday, according to statements made to CNBC by individuals familiar with the ongoing negotiations. However, both GM and Nikola have agreed to extend the discussions until December 3, but if an agreement cannot be made by then, the partnership may ultimately be terminated.
Information for this briefing was found via CNBC and Nikola. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.