Electric scooter company OjO Electric Corp. [stock_market_widget type="inline" template="generic" color="default" assets="OJO.V" markup="(TSXV: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has signed a definitive agreement to purchase Gotcha Mobility in a deal worth $12 million. While shares have been halted pending the closing of the acquisition, it appears investors will see that change in the coming weeks.
OjO Making Moves
The deal, initially announced in November 2019, is now expected to close next month. It will pay an initial $2.5 million in cash and issue $7 million worth of stock to Gotcha shareholders, before paying an additional $2.5 million in cash within five months of the purchase.
Once the deal goes through, the firm will rebrand as Last Mile Holdings Ltd. and its new ticker symbol will be MILE.
Gotcha is an 11-year-old electric scooter company based in Charleston, South Carolina. It started with electric rideshare vehicles and pedal bikes, and then expanded into e-bikes, e-scooters, and e-trikes, focusing on university campuses and small to mid-size municipalities.
The company has secured around 20,000 permits, 80% of which are exclusive. The combined entity will become the third largest micro-mobility company in North America, behind only Lime and Bird, according to OjO.
In an earlier interview with OjO CEO Max Smith, we discussed OjO’s differentiated approach to the market. They focus on solid scooter economics as opposed to “blitzscaling”. In a time when investors are tired of unprofitable startups, we see this as a smart decision.
Consolidation Key to Growth in Micro-Mobility
The sector has seen significant consolation in recent months: Bird bought Scoot, Lime launched a tie-up with Uber and Grow Mobility was formed by the merger of Grin and Yellow. OjO has previously talked up the cost savings that can be achieved by joining forces with Gotcha.
Last Mile Holdings Ltd. will cover 80 different locations and own fully contracted permits to deploy a total fleet of 16,000 mobility units by year-end 2020 and 27,000 mobility units by year-end 2021.
In connection with the acquisition, OjO – which is based in Vancouver and Oxnard, California – will complete a concurrent non-brokered private placement of 27.5 million subscription receipts at C$0.40 apiece for gross proceeds of C$11 million.
The proceeds from the private placement will be used to close the acquisition and for general working capital purposes.
OjO chief executive has previously lauded the exclusive nature of Gotcha’s expansive portfolio of long-term contracts, its strong corporate culture and experienced team, claiming that it represents a perfect match. The goal is to provide sustainable mobility solutions that meet public transportation needs while also reducing carbon emissions and congestion.
OjO recently unveiled its V2 model of e-scooter and increased the size of its fleet by 500% in Austin and Dallas.
