VivoPower's stock rockets four-fold after deal to sell Tembo EV subsidiary for a big gain

By Tomi Kilgore

Shares of VivoPower International PLC took off on Tuesday, after the U.K.-based sustainable-energy company announced a deal to sell its electric-utility-vehicle subsidiary Tembo for a big profit.

Under terms of the deal, Tembo will merge with special-purpose acquisition company Cactus Acquisition Corp. 1 Ltd. (CCTS) After the deal closes, which is expected in May, the combined company is expected to remain listed on the Nasdaq under the name Tembo Group.

Cactus Acquisition will issue 83.8 million shares priced at $10 per share to VivoPower (VVPR) in exchange for Tembo, which represents an equity valuation for Tembo of $838 million.

That valuation is about 120 times the $7.1 million in cash that VivoPower paid to buy Tembo during the fiscal year that ended June 2021.

VivoPower's stock skyrocketed 323.4% in afternoon trading, enough to make it the biggest gainer among major U.S. exchanges. Trading volume soared to 105.9 million shares, which dwarfs its full-day average of about 17,100 shares and its previous one-day record of 11.05 million shares traded on Oct. 9, 2020.

Cactus Acquisition's stock slipped 0.5%.

Once the deal closes, VivoPower will distribute a total of 16.76 million Tembo dividend shares, or about 20% of the $83.8 million share-merger consideration, to its shareholders of record as of April 30.

VivoPower is a sustainable-energy company that focuses on the electrification of off-road and on-road utility vehicles. Tembo provides off-road and on-road electric utility vehicles and helps companies electrify their fleets.

In VivoPower's latest annual report filed in March, the company said it had a net loss for the fiscal year ended June 30, 2023 of $24.4 million on revenue from contracts with customers of $15.1 million - compared with a loss of $22.1 million on revenue of $37.6 million in fiscal 2022.

Year to date, VivoPower's stock has now rallied 218.1%, while Cactus Acquisition shares have slipped 3.8% and the S&P 500 index SPX has advanced 9%.

-Tomi Kilgore

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04-02-24 1442ET

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