Embark Trucks, the autonomous trucking company that recently cut 70% of its workforce, is being acquired by Applied Intuition, a simulation and software provider for autonomous vehicle development. The all-cash transaction has an equity value of about $71 million, according to the companies.
Embark went public in 2021 via a merger with a special purpose acquisition company. Like many so-called SPACs that joined the public markets before they were mature enough, Embark struggled to develop and commercialize its autonomous vehicle technology. In March Embark made the tough call to lay off the majority of its staff and shut down two offices.
The remaining 30% of workers were tasked with the job of winding down operations, according to an email to employees from CEO Alex Rodrigues. According to a regulatory filing, that would have involved a sale of assets. In the meantime, Embark's board embarked on "a process to explore, review and evaluate a range of potential strategic alternatives available to the company," including potential dissolution or liquidation of assets, among other options.
On Thursday, Embark's decision became clear.
Applied will integrate Embark's internal tools, data and software assets to improve its offerings to customers in the trucking and automotive industries. Applied claims to power autonomy programs of "17 of the top 20 global automotive OEMs" -- companies like General Motors, Volkswagen, Daimler and Nissan, as well as newer market entrants like Motional and Einride, according to Applied's website.
Per the terms of the agreement, which was approved unanimously by the boards of both companies, key Embark employees will be absorbed into Applied in order to help ensure a smooth transition and encourage growth of the company's suite of products.
Embark shareholders will receive $2.88 per share in cash. Embark's share price closed Thursday at $2.94, but quickly dropped about 7% in after-hours trading. The companies expect the transaction to close in the third quarter, after which Embark shares will stop trading on the Nasdaq.
Embark Trucks was founded in 2016 by CEO Alex Rodrigues and CTO Brandon Moak, and was one of the buzzier startups on the market. By 2018, Embark had raised about $47 million. Its deal to merge with SPAC Northern Genesis Acquisition Corp. II was valued at $5.2 billion.
Despite high hopes, Embark found itself running short on capital, reporting about $190 million in cash and cash equivalents at the end of the third quarter of 2022. Today, Embark's market capitalization is about $70 million, down $20 million from just two months ago.
The acquisition comes just a couple months after Applied acquired another company, SceneBox, which built a data management and operations platform specifically for machine learning. Late last year, the company also secured a $49 million two-year contract with the Army and Defense Innovation Unit to deliver an autonomy software development and testing platform for the Army's Robotic Combat Vehicle program.