05.05.2015

Smiths sign JV

Smith Electric Vehicles, in which Snorkel’s co-owner Tanfield still retains a holding, has signed an agreement to form an exclusive joint venture with Hong Kong based FDG Electric Vehicles.

The deal will see Smiths giving the joint venture all the its electric vehicle technology and rights for North America, while FDG will invest $15 million in cash – in two tranches of $5 and then $10 million, along with $30 million in assets and technical rights. The New Joint Venture entity to be responsible for US product development, sales and marketing, while Smith will continue to be responsible for manufacturing and will retain all of its rights outside of the USA.

Smith will initially hold 47 percent of the joint venture, the 20 million shares will be distributed to its shareholders on a pro-rata basis. The joint venture then plans to raise a further $20 million of capital, with Smiths shareholders having a first right of refusal to participate on a pro-rata basis. Tanfield now owns just 5.75 percent of Smiths along with 14 million warrants with a total value of $4.34 million.

Vertikal Comment

This transaction is likely to further devalue Tanfield’s holding in Smiths, which along with a 49 percent holding in Snorkel, is all that remains of the business that at one time owned all of the electric vehicle business along with UpRight and Snorkel. It does of course have some upside potential, but the Smiths technology, which had a substantial value even 10 years ago, has largely been overtaken and marginalised by others.

It is still very doubtful that Tanfield investors will ever see a return on their investment.