A sex scandal threaten cooperation between Nikola Motor and GM after Nikola’s founder and former executive chairman, Trevor Milton, was accused of sexually harassing women. While there are also accusations of fraud against him, it is now highly likely that Nikola’s $2 billion deal with GM will be wrecked.
The two companies were expected to close the $2 billion deal so far, under which GM would acquire 11% of Nikola’s shares, with the aim of providing it with battery and hydrogen cell technologies.
Officials on both sides have made it known that talks between them are continuing. Nikola’s stock closed Tuesday down 7.4% at $17.88. It was the worst close for the stock since it was listed on the stock market on June 4. GM’s stock closed down 2.4% at $28.74.
Wall Street had greeted the news of the deal enthusiastically and on the day of the announcement Nikola soared by 53%, while Milton himself had called the partnership “dreamy.” For his part, GM CEO Mary Barra described it as a “win-win” partnership. The celebrations, however, ended quickly.
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Two days later, short seller Hindenburg Research uncovered reports of accusations against Milton that he made false statements about his company’s technology to attract investors and partnerships with other automakers. He described Nikola as a “fraud built on dozens of lies” by Milton, who, after denying the accusations, eventually resigned on September 21.
Then came a second “hit” on the Nikola-GM deal. Two women filed a sexual assault lawsuit against Milton. The charges state that it all happened 15 years ago, when one of the two women (one of Milton’s cousins and the other employee) was a minor. Milton’s cousin claims he assaulted her in 1999 when she was 17 – while the other woman speaks of assault in 2004 when she was 22.