US-based nuclear reactors developer X Energy has signed a definitive merger agreement with Ares Acquisition, a publicly-traded special purpose acquisition company (SPAC).
The business combination, which values X Energy at around $2bn, will create a publicly-traded, developer of advanced small modular reactors (SMR) and clean energy fuel.
Under the terms of the agreement, X Energy’s shareholders will transfer 100% of their existing equity interests into the combined company.
The combined company will receive around $1bn of cash held in AAC’s trust account, along with a commitment for $120m financing from institutional and strategic investors.
X Energy also received around $58m of interim financing throughout this year, from existing strategic investors, including Dow and Curtiss-Wright Corporation.
The proposed SPAC deal has been unanimously approved by the Board of Directors of both AAC and X Energy.
It is expected to be completed in the second quarter of 2023, subject to customary closing conditions, including regulatory, and shareholders’ approval.
Upon the closing of the transaction, the combined company will be named X-Energy, and its common equity securities and warrants will be listed on the New York Stock Exchange.
Assuming none of AAC’s existing shareholders exercise their redemption rights, X-energy’s existing equity holders will have more than 60% of the combined company.
X Energy chief executive officer J Clay Sell said: “We see a significant addressable market opportunity given the rapidly growing demand to accelerate the decarbonization of power and provide greater energy security.
“We have assembled a world-class team that shares a deep passion for our work, and we believe X Energy’s technology is distinctly positioned to support the delivery of nuclear energy at scale to meet the needs of customers, consumers and businesses globally.
“The commitments from Ares and our commercial partners reflect their confidence in our business and our team. I appreciate their continued collaboration to help us achieve our objectives.”
X Energy is engaged in developing small modular nuclear reactors and fuel technology for clean energy generation.
The company’s Xe-100 is a new-generation high-temperature gas-cooled reactor (HTGR), and TRISO-X is its tri-structural isotropic (TRISO) encapsulated particle fuel.
Guggenheim Securities served as a financial advisor and Latham & Watkins as legal advisor to X Energy, on the transaction.
Moelis & Company served as a financial advisor and Kirkland & Ellis as a legal advisor to AAC, and Ocean Tomo as a financial advisor to the Special Committee of the AAC Board of Directors.
UBS Securities and Citigroup Global Markets are serving as capital markets advisors to AAC and Ropes & Gray is acting as a legal advisor to the capital markets advisors.
Ares co-founder, Ares Private Equity Group co-chairman, and AAC co-chairman and chief executive officer David Kaplan said: “Ares and X-energy share a strong commitment to driving the transition to a lower-carbon economy through innovation in climate infrastructure.
“As an early mover in developing proprietary nuclear technology and backed by an attractive business model and veteran leadership team, we believe that X-energy is well-positioned to become a leader in the global clean energy generation market.
“We look forward to contributing Ares’ significant investment and value creation experience, global ESG focus and deep understanding of the public markets to support X-energy’s vision to deliver a positive impact and long-term value creation.”
