In a move that might best be described as “counterintuitive,” oil company Shell (NYSE:SHEL) snapped up electric vehicle charging company Volta (NYSE:VLTA). Shell shareholders were not at all happy about this move, and Shell traded lower in Wednesday afternoon trading.
Shell’s deal to buy Volta required Shell to spend $169 million in cash to pick up the company. Shell lands all outstanding Volta common stock for $0.86 per share, roughly 18% above what the stock closed on January 17. Thus, Shell is now looking to own a company that offers free charging for electric vehicles but offers media display terminals that advertisers could buy time on. That would give advertisers a captive audience that might pay attention to the ads.
Reports suggest Shell picked up Volta to expand its own footprint in electric vehicle charging and mobility. Shell is even going so far as to put further investment in Volta with “subordinated secured term loans.” These loans will give Volta a little extra life until the acquisition concludes. The market for electric vehicle infrastructure is certainly substantial, and Shell may well consider Volta the step it needs to fuel tomorrow’s vehicles as well as today’s.
Investors are unhappy, but Wall Street has fewer qualms. Analyst consensus currently calls Shell a Moderate Buy with 24.59% upside potential thanks to an average price target of $73 per share.
