EV Charger MediaCo Volta Acquired By Fossil Fuel Giant Shell. No, Really …
January 18, 2023 by Dave Haynes
The largest DOOH media company marketing EV charging stations as a medium just did a deal to be acquired – somewhat surprisingly by a fossil fuels-based energy supplier.
Volta has done a “definitive merger agreement” that would see Shell USA Inc., a subsidiary of the big multinational company, acquire Volta in an all-cash transaction valued at approximately $169 million.
“The transaction brings Volta’s powerful dual charging and media network to Shell’s established brand,” says the announcement, “and seeks to unlock robust, long-term growth opportunities in electric vehicle (“EV”) charging.”
“Both Volta and Shell have a demonstrated ability to meet the changing needs of customers, and this acquisition will bring that experience together to provide the options that are needed as more drivers choose electric.”
The deal sees Shell USA acquiring all outstanding Class A common stock of Volta at $0.86 per share in cash upon completion of the merger, which is roughly an 18% premium over Tuesday’s closing price on the market.
“The shift to e-mobility is unstoppable, and Shell recognizes Volta’s industry-leading dual charging and media model delivers a public charging offering that is affordable, reliable, and accessible,” says Vince Cubbage, Interim CEO of Volta. “While the EV infrastructure market opportunity is potentially enormous, Volta’s ability to capture it independently, in challenging market conditions and with ongoing capital constraints, was limited. This transaction creates value for our shareholders and provides our exceptional employees and other stakeholders a clear path forward.”
The PR adds:
This acquisition builds on the momentum in electric mobility by combining one of the leading EV charging and media companies in the U.S. with one of the world’s largest energy suppliers. The transaction provides the opportunity to unlock Volta’s significant signed pipeline of charging stalls in construction or evaluation and capture the seismic EV charging market opportunity. Following the completion of the transaction, there will be no immediate change in driver experience, Volta Media™ Network capabilities available to advertisers, or services provided to commercial properties and retail locations.
As part of the agreement, an affiliate of Shell will provide subordinated secured term loans to Volta to bridge Volta through the closing of the transaction.
Volta’s Board of Directors, having determined that the transaction is in the best interests of the company’s stockholders, has unanimously approved the transaction and recommends that Volta’s stockholders approve the transaction and adopt the merger agreement at the special meeting of stockholders to be called in connection with the transaction.
The transaction is expected to close in the first half of 2023.
I am no more familiar with Volta’s business than most people in the digital signage industry, so I don’t have a lot of insight into the deal. What was evident was that Volta was burning through a lot of cash and had to do a major round of layoffs in 2022. The bridge financing that is part of the deal would seem to be, in poker terms, a bit of a tell.
This post from Canary Media goes more into the background, noting: Shell’s purchase price of 86 cents per share, while an 18 percent premium over Volta’s share price at the close of Tuesday trading, is less than one-tenth the value that Volta’s shares briefly reached after its August 2021 merger with SPAC TortoiseCorp II. Shell’s acquisition price is a little over half of the roughly $300 million Volta raised as part of its public offering.
Volta’s business model is based on deploying electric vehicle charging stations in busy parking lots (like grocery stores) and running advertising on the built-in digital ad posters. The last financial reporting (the company is public) showed the company had substantial losses of $48M and $65M in the previous two quarters.
But the capital build-out phase of a company that puts in hardware on its own nickel is unavoidably expensive, and will top out at some point. Volta said in its last reporting period that full year 2022 revenue is expected to be in the range of $70M-$80M, but that forecast was pulled back. The company also got a delisting warning from the NYSE after its share price dropped below $1 for 30 trading days.
Shell’s thinking is not laid out in PR, but we can assume the company is doing a couple of things:
- diversifying as motor vehicles increasingly switch from fossil fuels to batteries;
- developing some good optics with a deal that can show Shell is not just about fossil fuels.