The merger with the SPAC will enable ESS to become a publicly listed company
ESS Tech, a US-based energy storage company, has agreed to merge with ACON S2 Acquisition in a deal that values the combined company at around $1.1bn.
The merger with the special purpose acquisition company (SPAC) sponsored by an affiliate of ACON Investments will enable ESS Tech to become a publicly listed company. The enlarged energy storage firm is expected to trade on the New York Stock Exchange (NYSE).
The Oregon-based firm manufactures long-duration iron flow batteries for commercial and utility-scale energy storage applications.
Established in 2011, the company is said to have developed an iron flow battery technology that involves the use of abundant iron, water, and salt in its energy storage systems. This approach is said to make the systems environmentally safe and also cost-effective.
ESS CEO Eric Dresselhuys said: “The goal of ESS from its inception has been to develop a fundamentally new, high-performance battery technology.
“Our team has delivered on that goal over the last decade by developing patent-protected iron flow battery technology that is well-suited for the grid and the environment.
“Unlike currently available approaches, our solution offers a green, lower lifecycle cost, energy storage system with performance that doesn’t degrade over time.”
The deal will provide net cash of around $465m to the combined entity, assuming that there are no redemptions by shareholders of ACON S2. On this basis, ESS’ existing shareholders will own a stake of nearly 64% of the combined firm.
Backing the merger is a $250m fully committed private investment in public equity (PIPE) from certain institutional investors, who will get a 16% stake.
The PIPE investors include Fidelity Management & Research, SoftBank Group’s SB Energy Global, Breakthrough Energy Ventures, and BASF.
ESS will utilise the net proceeds from the deal for ramping up manufacturing capacity globally and invest in extending its technology advantage.
ACON S2 CEO Adam Kriger said: “ESS offers a remarkable technology that is a game-changer in the world’s transition to clean energy.
“With its tremendous market opportunity and leadership position in cost, performance and sustainability, ESS has a clear trajectory for growth as it scales.”
The merger is expected to be finalised in the third quarter.