Harley’s LiveWire Spinoff Is Off to Rough Start
The special purpose acquisition company (SPAC) formed to take LiveWire public cashed out most its initial investment.
Last month, I wrote a post where I argued that Harley-Davidson was right to spin off LiveWire and make it a separate company. And for the record? I still think that’s a great idea, as I believe the MoCo has a real opportunity to make a — completely new — name for itself in the electric motorcycle world. That said, it doesn’t look like many investors agree with me. Because last week, the special purpose acquisition company (SPAC) formed to take the unit public cashed out virtually all of its initial investment.
As our friends at RideApart reported of the 400 million it held during the initial public offering, it clawed back a whopping 370 million. Yikes.
Aside from betraying the fact that the SPAC — AEA-Bridges Impact Corp. — isn’t optimistic about the nascent company’s future, it also means that Harley-Davidson owns a 90 percent stake in LiveWire, as opposed to the 75 percent it initially aimed for. Exactly why AEA-Bridges moved so aggressively isn’t totally clear. But the fact that LiveWire’s official debut raised just about half of the funds Harley had projected likely didn’t help, and broad industry trends — including skyrocketing inflation and interest rates — are also partly to blame.
Obviously, this isn’t exactly what the Milwaukee brass was expecting when it opted to spin LiveWire off — though I think it’s a little early to play Chicken Little and start stoking fear. In my opinion, LiveWire needs some room to grow. It needs time to put a little road between the its origins with H-D, so it can start building a brand and reputation that will stand on its own. And part of that process involves a wide swath of the marketplace forgetting that the two brands are connected. Because Harley is a polarizing company in that its fans love it with a passion — and the haters hate it with equal fervor.
Fortunately, when it comes to situations like this? The average American buyer has a pretty short memory. Also, Harley-Davidson is currently doing quite well, as the Rewire strategy has sparked increased investor confidence in the iconic brand. So if Harley has to hold a larger stake than it initially wanted? That’s OK — there’s cash to do that. Hopefully, the board and CEO Jochen Zeitz have the stomach to hold on through the initial rough patch, and build upon LiveWire’s incremental successes until it’s is generating enough cash to stand on its own feet.
Only time will tell, however. So we’ll just have wait and see what the future holds for the electric upstart. But I’m keeping my fingers crossed.
Photos: Harley Davidson
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