Sometimes the simplest way to fix a public company is to stop having it be public. That seems to be the thinking at LS Power, which on Monday told the world it wants to buy out the rest of EVgo Inc. (EVGO) and take the electric vehicle charging company private.
The price: $2 per share in cash. That is a 59% premium to EVgo's Oct. 30 closing price and a 62% premium to its 30-day volume-weighted average price, according to the Schedule 13D filing with the Securities and Exchange Commission.
Investors did the math quickly. EVgo shares were up 46.96% at $1.85 at the time of publication on Monday, according to market data. Not quite the full two bucks, which tells you the market is pricing in some chance the deal does not happen. More on that in a second.
LS Power Already Owns the Place, Basically
LS Power Equity Advisors and its affiliates hold approximately 178 million Class A and Class B shares. That works out to about 56% of EVgo's outstanding voting securities. So this is less a hostile takeover and more a landlord asking to buy the building he already mostly owns.
The firm wants to acquire the remaining publicly held Class A shares through a merger. It also made clear it has no interest in selling its existing holdings or participating in an alternative change-of-control transaction involving EVgo. Which is a polite way of saying: we are not going anywhere, and neither is anyone else's bid.
If the deal goes through, EVgo could delist its Class A shares from the Nasdaq Global Select Market. No more quarterly calls, no more ticker, no more explaining to retail investors why the charging business is a slow burn.
The Fine Print: A Special Committee Gets a Vote
LS Power expects EVgo's board to set up a special committee of independent directors to evaluate the offer. The firm said it would proceed only if that committee, advised by independent legal and financial advisers, recommends the transaction to the board.
That is standard procedure for this kind of related-party deal, and it matters. When your majority owner wants to buy the rest of you, the board cannot just say yes over coffee. Someone independent has to check the price.
LS Power also emphasized that the proposal is nonbinding and may be modified or withdrawn at any time. No definitive agreement has been signed, and there is no guarantee a transaction will be completed. The firm did say it was prepared to move immediately to negotiate and finalize a deal, which is the corporate equivalent of having the paperwork already printed.
Volume Goes Parabolic
The trading action was the real story of the day. Volume surged to approximately 58.56 million shares, compared with the stock's 100-day average of 3.67 million shares. That is nearly 16 times its normal daily trading volume, a clear sign investors were scrambling to react to the takeover proposal.
The proposed $2-per-share cash offer gives investors a potential benchmark for the company's valuation, even if the transaction remains subject to review and approval. For now, the stock is trading below that number, which is the market's way of saying it has seen enough nonbinding proposals to know they are not guarantees.
What happens next is mostly a waiting game: watch for the special committee, watch for a definitive agreement, and watch whether anyone else decides to show up with a checkbook. LS Power has already said it is not interested in selling, so any rival bid would have to go through the board. For EVgo shareholders, the next few weeks are about whether $2 is the floor or just the opening offer.
