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Maxwell Jumps Over 50% after Tesla Deal

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Maxwell Technologies

On Monday, February 4, Maxwell Technologies (MXWL), an American energy storage and power delivery products maker, surprised investors by announcing its acquisition by popular electric carmaker Tesla (TSLA). The news triggered a buying spree in Maxwell stock, and as a result, at 9:13 AM EST, it was trading with 52.4% gains in the premarket session on Monday from its Friday settlement price of $3.07. Let’s take a look at more details about the deal.

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Tesla-Maxwell deal

According to the agreement signed between the two companies, “Tesla will commence an all-stock exchange offer” for Maxwell’s total shares at $4.75 each. After the completion of the deal, Maxwell will become a wholly owned subsidiary of Tesla.

In its press release related to the deal, Maxwell didn’t mention any specific date for the closing of the transaction. However, it expects the deal to be completed in the second quarter of 2019. After the completion of the deal, Maxwell investors will receive “a fraction of a share of Tesla’s common stock.”

While Maxwell’s board of directors has already approved the deal, it still needs the necessary regulatory approvals.

Maxwell’s president and CEO, Franz Fink, in his statement, praised Tesla, calling it a “well-respected and world-class innovator that shares a common goal of building a more sustainable future.”

Tesla’s bet on Maxwell is going to be fairly small as compared to its acquisition of SolarCity in $2.6 billion in 2016. Nonetheless, the Maxwell acquisition will expand Tesla’s market share in the energy storage and power products segment. Investors’ high expectations that the deal will open doors for Maxwell to significant future growth potential is likely the main reason why its stock surged over 50% today.

Today, at 9:13 AM EST, Tesla stock was trading on a mixed note with minor gains of 0.2% in the premarket session. As of February 1, TSLA had lost 6.2%, while MXWL had gone up by 48.3% as compared to 5.9% gains in the NASDAQ Composite Index (QQQ).

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