Battery maker ESS to surpass USD-1bn EV in merger with blank check co

US long-duration iron flow batteries maker ESS Tech Inc has agreed to merge with a publicly-traded special purpose acquisition company (SPAC) to gain a listing in New York and establish a combined company with a USD-1.07-billion (EUR 883.5m) pro forma enterprise value (EV).

Specifically, ESS has sealed a definitive agreement for a business combination with ACON S2 Acquisition Corp (NASDAQ:STWO). Under its terms, ESS’ existing shareholders, including its founders, will own about 64% of the combined company, assuming no public shareholders of ACON S2 exercise their redemption rights.

The transaction is expected to fetch some USD 465 million in net proceeds. As part of it, ACON S2 has raised USD 250 million from a fully-committed Private Investment in Public Equity (PIPE) deal involving institutional investors such as Fidelity Management & Research Co LLC, SB Energy Global Holdings Ltd, a fully-owned subsidiary of SoftBank Group Corp (TYO:9984), Breakthrough Energy Ventures and BASF Venture Capital. The PIPE investors will own around 16% of the issued and outstanding shares of common stock of the combined company at closing, when ESS will be listed on the New York Stock Exchange under the ticker symbol “GWH.”

ESS has developed a long-duration storage battery, engineered to support renewables and stabilise the electrical grid. The firm says that its product is built from earth-abundant materials, making the energy storage system environmentally safe and cost-effective. ESS plans to use the proceeds from the transaction primarily to fund an expansion of its production capacity to 16 GWh across three continents.

The blank check company part of this transaction is sponsored by an affiliate of private equity firm ACON Investments LLC.

(USD 1.0 = EUR 0.824)

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