Troubled electric-truck company Nikola (NKLA +0.00%) and its partner General Motors (GM 0.96%) are renegotiating the terms of the deal they announced on Sept. 8, according to a report today by The Detroit Free Press.
Citing confidential sources, the Free Press says that GM is looking to increase its stake in Nikola after a short-seller's report prompted leadership changes at the fledgling manufacturer. The resulting drop in share price reduced the value of the Nikola stock that GM was slated to receive through the deal.
A rendering of the Nikola Badger pickup. Image source: Nikola.
The partnership, announced on Sept. 8, involved GM sharing its fuel cell and battery technologies with Nikola. GM also agreed to manufacture the Badger, the heavy-duty all-electric pickup designed by Nikola, which has no current auto manufacturing capabilities of its own. In return, GM was to receive 47.7 million new shares of Nikola's stock, which spiked on the news to above $50 a share.
The very next day, though, short-seller Hindenburg Research published a critical report on Nikola, alleging fraudulent statements by the company and its founder and chairman Trevor Milton. The stock price immediately tumbled to $32, and prompted Milton's resignation.
By Sept. 29, Nikola was trading below $18, and GM released a brief statement saying it was continuing its discussions with Nikola instead of closing the deal.
At $50, GM's 47.7 million Nikola shares would have been worth nearly $2.4 billion. At $20, though, they would be worth just $954 million. Representatives from the companies have reportedly been meeting on a daily basis.
Either company can terminate the deal if it isn't completed by Dec. 3. It's seen as essential to Nikola's future, which likely gives GM the upper hand in these negotiations.
