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Autonomous truck tech firm Kodiak's decision to go public via SPAC with Ares Acquisition Corp. II came down to timing, CEO Don Burnette tells Axios Pro.

Why it matters: The company was valued on Thursday at about $2.5 billion in one of the largest operating company de-SPAC deals of the year.

This Expert Voices interview was edited for length and style.

Axios: As the IPO market heats up, why pursue a SPAC? And why now?

Burnette: "We were thinking about accessing the public capital markets late last year, early this year, as we deployed our first driverless platform. That was an important gating item for us to actually consider this move. 

When we were considering going the traditional IPO route, we left the door open for considering a SPAC if we had the right partner. Ares came along, and they made a very compelling pitch.

Ultimately, the SPAC decision came down to one of timing. It was a more sure path to get into the markets with a faster timeline."

Given the rate of redemptions, how much runway does this provide?

"We haven't given any guidance on the runway. We're still analyzing the outcome, and we'll figure out our path. 

We have eight trucks on the road today driving around the clock that are fully driverless — meaning nobody in the cab, no observer, no safety monitor, etc. Our focus will be on expanding that deployment and ultimately deploying in long-haul trucking as well."

How do you plan to use the proceeds? Any acquisition plans?

"Nothing we can talk about specifically. But we do plan to continue to scale the technology to increase our supply chain and manufacturing capabilities."

How many total Kodiak trucks are on the road today? How many orders?

"We have a fleet of trucks that we own and operate for on behalf of long-haul carriers such as Werner Enterprises, J.B. Hunt — it's around 15 trucks on a daily basis, give or take. 

And eight trucks are fully driverless, and those are the ones deployed to Atlas. Those are owned and operated by Atlas. The other trucks in our fleet we operate as Kodiak."

Are you still on track to scale to hundreds of trucks by the end of 2026?

"Atlas has locked in and secured a 100-truck order. That's the initial 100 trucks of their overall contract. We have not publicly disclosed the full extent of that contract as of yet.

We expect to deliver tens of trucks by the end of the year — and all of those are going to go to Atlas by the end of 2025. Then, in 2026, we'll continue to scale with the target of reaching hundreds of trucks by the end of the year, and then thousands of trucks in 2027 and beyond."

What key milestones will determine Kodiak's success or failure as a public company?

"One was bringing on Roush Motors as our manufacturing partner. That was a big question mark for investors: 'Hey, how are you going to manufacture hundreds and thousands of trucks?' 

A few weeks ago, we delivered the first truck off the Roush line. So that's a huge step for the company, huge step for our production capabilities."

Are there performance-based vesting or earnouts built into the transaction to align management incentives with shareholder outcomes?

"Rather than the traditional earnout, say at $12, that you've seen in a lot of other SPAC transactions, we specifically set our earnouts at high values, at three tranches, at $18, $23, and $28. It was important for me to be able to convey to investors that our incentives are aligned. 

We have earnouts that are struck at significantly higher values. We need to create value for our investors before we see those earnouts."

"A more sure path": Kodiak CEO says SPAC deal was a matter of timing, capital access

The company was valued at about $2.5 billion on Thursday in one of the largest operating company deSPAC deals of the year.

Photo illustration of Kodiak CEO Don Burnette. 

Don Burnette. Photo illustration: Axios Visuals. Photos: Courtesy of Kodiak

Autonomous truck tech firm Kodiak&#x27;s decision to go public via SPAC with Ares Acquisition Corp. II came down to timing, CEO Don Burnette tells Axios Pro.Why it matters: The company was valued on Thursday at about $2.5 billion in one of the largest operating company de-SPAC deals of the year.

"A more sure path": Kodiak CEO says SPAC deal was a matter of timing, capital access

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