Tevva sues ElectraMeccanica for $75m after deal collapses

Weeks after a merger with US-based vehicle manufacturer ElectraMeccanica broke down, Tevva Motors has filed a lawsuit against the firm and its CEO Susan Docherty.

The UK-based electric and hydrogen truck firm is seeking damages from ElectraMeccanica of $75 million (£60m).   

ElectraMeccanica pulled the plug on the deal with Tevva after it claimed the company failed to share “material information”.

Tevva disputed this, saying it had given “full and open access at every point in the process” to ElectraMeccanica’s advisors and management, with “full financial due diligence” prior to signing the definitive agreement and senior members of the ElectraMeccanica executive team in residence for many weeks at Tevva’s UK facility.

It also refuted the basis under which the planned merger had been terminated and has now filed a claim in the United States District Court in Arizona against ElectraMeccanica and Docherty, seeking redress for what it calls the “improper and unmerited” termination of the merger.

The lawsuit claims that ElectraMeccanica made “spurious, defamatory allegations” in a “thinly-veiled attempt to justify its abrupt termination of a binding merger agreement with Tevva”.

A merger agreement that Tevva describes as the product of “thousands of hours of time spent by both parties evaluating and structuring a mutually beneficial business”.

Tevva has given ElectraMeccanica  until November 17, to reach an “acceptable solution to this situation”.

Alongside the $75m in damages, the lawsuit is seeking an injunction blocking ElectraMeccanica from entering into an alternative merger agreement, and a protective order preventing it from dissipating its cash through dividends and executive compensation, for example.

Under the merger plans with ElectraMeccana, the combined company was due to operate under the Tevva name from a new HQ in Delaware, USA.

Tevva’s existing 110,000-square-foot EV manufacturing facility in Tilbury would have been complemented by ElectraMeccanica's recently-commissioned 235,000-square-foot facility in Mesa, Arizona, which was expected to enable the combined company to scale its production to serve the UK, European and US markets.

Following the deal’s collapse, Tevva said it had re-engaged with a number of investors and public companies looking for a merger.

“The company is confident that from these various opportunities it will secure both medium and long-term financing to complete its business plan of commercialisation and ramp up sales,” it added.