A Step Toward Withdrawal from Nikola
Hanwha Group has decided to sell half of its stake in U.S. hydrogen truck company Nikola, which has been surrounded by controversy over a fraud. Hanwha said it will sell the stake to raise funds for investment in the hydrogen business and maintain a cooperative relationship with Nikola, but many analysts say that it is a move to put an end to its business with Nikola.
Nikola announced in a public disclosure on March 17 (local time) that Hanwha would sell off 50 percent (11.05 million shares) of its stake in Nikola. The stake sale is worth US$181.1 million based on the closing price of US$16.39 on March 17. Hanwha also acknowledged its plan to sell 50 percent of the stake.
Hanwha Energy and Hanwha Chemical invested US$100 million in Nikola in 2018 to secure a 6.13 percent stake in the U.S. company. Hanwha Solution CEO Kim Dong-kwan met with Nikola founder Trevor Milton in person and signed the contract, which was evaluated as a successful investment orchestrated by CEO Kim. Nikola recorded the highest closing price of US$79.73 four days after listing on NASDAQ in June 2020, sending the value of Hanwha's stake increasing 16-fold to US$1.6 billion. However, the stock price of Nikola plunged in September 2020 as allegations were brought up that Nikola's hydrogen truck is a fraud. Now the company’s stock price stands at US$16.39.
Industry insiders believe that Hanwha made the stake sale decision to leave Nikola. Following the fraud allegations, General Motors gave up its plan to take a stake in Nikola and German parts maker Bosch also lowered its stake in Nikola.
However, Hanwha Group said it will maintain its strategic partnership with Nikola. "Hanwha is still playing an active role as a member of the board of directors," Nikola said.