Tesla Completes Acquisition of Maxwell Technologies

Tesla, Inc. has announced the successful completion of its previously announced offer to exchange all outstanding shares of common stock of Maxwell Technologies, Inc. ("Maxwell") for 0.0193 of a share of Tesla common stock, together with cash in lieu of any fractional shares of Tesla common stock, without interest and less any applicable withholding taxes.

The exchange offer expired at 11:59 p.m., Eastern Time, on Wednesday, May 15, 2019. As of the expiration of the exchange offer, a total of approximately 36,764,342 shares of common stock of Maxwell were validly tendered in the exchange offer and not validly withdrawn, representing approximately 79% of the aggregate voting power of the shares of Maxwell common stock outstanding immediately after the consummation of the exchange offer.

All shares of Maxwell common stock that were validly tendered and not validly withdrawn prior to the expiration of the offer have been accepted by Tesla for payment in accordance with the terms of the exchange offer.

Following to the completion of the exchange offer, Tesla completed the acquisition of Maxwell by consummating the second step merger contemplated by the previously announced merger agreement between Tesla and Maxwell.

As a result of this merger, all shares of Maxwell stock that were not tendered in Tesla's exchange offer were cancelled in exchange for the right to receive the same consideration paid for Maxwell stock in the exchange offer.

background report - March 2019 Frost and Sullivan perspective on the acquisition of Maxwell Technologies by Tesla

One of the biggest game-changing news in the EV and energy storage industry is the impending acquisition of Maxwell Technologies for a reported $218 million with the all-stock-deal expected to be finalized in Q2, 2019. Maxwell Technologies is a pioneer in the design and manufacture of the high power density ultra-capacitors. The company has virtually unlimited opportunity, playing in the transportation, industrial and consumer markets Maxwell's core megatrends which drive its values include integration of renewable energy into the grid, electrification of ICE and accelerating EV growth fits like a glove into Tesla's energy strategy.

Tesla Model 3 currently has an energy density (at cell level) of 210 Wh/kg and 275 Wh/liter at the battery pack level. Maxwell claims that its patented dry cell electrode can produce energy density of over 300 Wh/kg which is 42.8% increase whereas the planned energy density of over 500 Wh/kg would be a 138% increase compared to Tesla's current batteries. Such a boost in the energy density will be a breakthrough in the EV industry as it can propel Tesla cars from the current range of 220 miles to around 375 miles. The end result of applying Maxwell's dry cell technology would be a simplified manufacturing process which can lead to 10 to 20% cost reduction with better battery life (up to 2x).

The acquisition offers the following benefits to Tesla:

Pairing Tesla's Powerpack with Maxwell's ultra-capacitor storage systems for utility-scale applications such as primary frequency response and grid stabilization.

Automotive applications - start-stop, regenerative braking, and actuated power.

The dry electrode manufacturing process which is an environmentally friendly process without solvents will improve battery performance including energy density and range while cutting down manufacturing costs.

So what impact will this acquisition have on Tesla's partnership with Panasonic?

There are clear signs that Tesla is looking to diversify in terms of battery suppliers to reduce its dependency on Panasonic. In addition to acquiring Maxwell, the company is already in talks with several Chinese battery manufacturers for local battery sourcing to cater to vehicles manufactured at Gigafactory 3. Meanwhile, Panasonic inked a deal with Toyota for the manufacturing of rectangular-shaped prismatic batteries which it aims to sell it to other OEMs such as Honda. It's certainly a temporary blow at the moment for Panasonic; however, the exclusive partnership for the Gigafactory at the Nevada plant is expected to keep Panasonic in play.

Frost and Sullivan believes that this acquisition is expected to be a clear winning strategy for Tesla as it has certainly bought a company whose goals clearly aligns with its vision. Also, they acquire an experienced technical and manufacturing team in Maxwell which is noticeably capable of making important advancements in the EV and storage industry. Given the fact that Musk already has a background on ultra-capacitors, Tesla is expected to commercialize the dry electrode manufacturing technology sooner than expected with potential synergies for the company which will further cement its position in the lucrative EV business.

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