Badger pickup from the Nikola Motor Company
Source: Nikola Motor Company
General Motors and Nikola A $ 2 billion deal is not expected to be finalized before Wednesday after fraud and sexual abuse allegations against the contested startup’s founder and former CEO Trevor Milton, according to two with the People trusted in negotiations have emerged.
Executives from both companies are expected to extend the talks, people said, asking not to be identified as the negotiations are not public.
The deal was originally viewed as a no-loss situation for GM. The partnership would give the Detroit automaker an 11% stake in the brand new company that supplies Nikola battery and fuel cell technology and produces its Nikola Badger pickup truck.
Nikola shares closed Tuesday 7.4% to $ 17.88 – the lowest closing price since the company went public on June 4. Nikola shares rose more than 4% in after-hours trading. GM shares closed 2.4% to $ 28.74.
The deal was welcomed by Wall Street, and Nikola shares rose as much as 53% on the day of the announcement in what Milton called a “partnership made heaven”. GM CEO Mary Barra described it as a “win-win”. But the celebration quickly turned sour.
Two days after the announcement of the short seller Hindenburg Research published a damn report Milton accused of making false statements about the company’s technology to attract investors and partnerships with other automakers. It characterized Nikola as an “intricate scam based on dozens of lies” by Milton, who dismissed many of the allegations previously Resignation on September 21.
Milton’s resignation combined with the fraud claims that are reportedly present triggered inquiries Nikola shares cratered by the Securities and Exchange Commission and Justice Department. Since the deal was announced, shares have fallen more than 60%, making the company less attractive to GM.
The latest blow to the Nikola-GM deal is still playing out. Two women, as first reported by CNBChave now filed sexual assaults against Milton with the Utah authorities. Both allegations were older than 15 years, but involved a cousin and a clerk when they were both 15 years old. Milton’s cousin Aubrey Ferrin Smith said he attacked her in 1999 when she was 17, while the other woman said her alleged attack occurred in 2004 when she was 22. CNBC will only identify sexual assault victims if the victim publishes their name.
The deal can be terminated by either side if it is not completed by December 3rd. This is evident from a public filing by Nikola when the partnership was announced.
The allegations of fraud and sexual assault have raised major concerns about the due diligence of GM and others involved with Nikola.
GM declined to say whether it was aware of allegations of fraud or sexual abuse related to Milton. GM CEO Mary Barra Earlier this month, he defended the company’s partnership with Nikola and said so “reasonable care” performed prior to the announcement of the agreement.
GM was introduced to Nikola by Steve Girsky, former GM vice chairman Successor to Milton as Executive Chairman at Nikola earlier this month. Girsky is a managing partner at VectoIQ, the special-purpose acquisition company that Nikola took public. He joined Nikola’s board of directors after the deal was closed.
Regarding Nikola, Girsky previously said his company “showed up with an army of people to look into this matter” a webcast with an industrial fair, Autoline, in early August.
“We really crawled over these guys. It wasn’t comfortable at times,” he said, adding that he had “no doubt there would be twists and turns here, but I’ve risked my reputation for this. “
Girsky did not return calls or texts for comment. VectoIQ did not return any emails. Bosch, a partner in a Nikola auto supplier since 2017, declined to comment on its Nikola due diligence process.