(Bloomberg) -- Lordstown Motors Corp. agreed to sell a substantial stake and give two board seats to manufacturing partner Foxconn Technology Group, replacing a previous arrangement for electric-vehicle production with a new deal.
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Foxconn will invest as much as $170 million in the company through the purchase of preferred stock and 18.3% of common shares, according to a statement Monday. The transaction will require a review by the Committee on Foreign Investment in the United States.
Lordstown shares jumped 11% as of 5:27 p.m. in New York.
The move deepens ties between the two companies, giving Foxconn a sizeable voting interest over the next two years as they pursue a newly announced EV development program together. Lordstown has sought to build its Endurance electric pickup with capital from Foxconn, which has had ambitions to grow in the EV market.
“It’s strengthening the strategic partnership with Foxconn,” Lordstown Chairman Dan Ninivaggi said in an interview. “It’s another step in that direction. It also provides us capital for our jointly developed EV program.”
Foxconn, the Taiwanese manufacturer best known as the maker of Apple Inc.’s iPhone, can buy 9.9% of the company without a CFIUS review, but would need US government approval to go beyond that. Assuming the deal is approved, Foxconn could own up to 19.9% of the common voting stock. Even if Foxconn buys more shares, it could not exceed that amount of voting stock, Ninivaggi said.
Foxconn completed a purchase of Lordstown’s Ohio factory earlier this year.
Separately, Lordstown on Monday announced third-quarter results, revealing an operating loss of $154.8 million.
(Updates with additional details beginning in third paragraph)
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