- ESS Tech, Inc. has entered into a definitive business
combination agreement with ACON S2 Acquisition Corp. (NASDAQ:
STWO); upon closing, the combined company expects to be listed on
the New York Stock Exchange under the ticker symbol “GWH.”
- ESS has developed a category-defining technology, an
environmentally friendly, low-cost, long-duration storage battery
engineered to support renewables and stabilize the electrical
grid.
- Built from earth-abundant materials, the ESS solution can be
deployed in a wide variety of environments, can operate across a
wide temperature range and poses no explosion risk.
- Disrupting a large and fast-growing market, ESS is valued at
approximately $1.1 billion, offering investors an attractive
opportunity to invest in a high-growth, genuinely sustainable
business that enables our renewable future.
- The business combination is expected to provide approximately
$465 million in net proceeds to the combined company (assuming no
redemptions), including a $250 million fully committed PIPE from
top-tier institutional investors, including Fidelity Management
& Research Company LLC, primarily to fund manufacturing
expansion to 16 GWh across three continents.
- Additionally, existing investors SB Energy (SoftBank Group
Corp.), Breakthrough Energy Ventures and BASF Venture Capital have
also participated in the PIPE, increasing their existing equity
holdings in ESS, and plan to continue their successful long-term
partnership with ESS.
ESS Tech, Inc. (“ESS Inc.”, “ESS” or the “Company”), a
manufacturer of long-duration iron flow batteries for commercial
and utility-scale energy storage applications, and ACON S2
Acquisition Corp. (NASDAQ: STWO), a publicly traded special purpose
acquisition company, today announced they have entered into a
definitive agreement for a business combination that will result in
ESS becoming a publicly listed company.
ESS was founded in 2011 with a mission to develop the cleanest,
lowest-cost long-duration energy storage systems on the market. ESS
developed an iron flow battery technology with innovative
technological breakthroughs that is built to transform the utility
grid by enabling safe, environmentally-friendly, long-duration
storage. Unlike traditional lithium-ion batteries that are made
from hazardous and costly materials, ESS’ patent-protected battery
solutions use abundant iron, salt and water, making them
environmentally safe and cost-effective energy storage systems.
Renewable energy deployment is increasing dramatically, with
installation records set each year and now surpassing other forms
of new generation coming online. In the long run, grid-scale energy
storage will need the capabilities of long-duration storage to pick
up the load for four to twelve hours when variable generation
wanes, yet be flexible enough to support fast-changing grid needs.
The total addressable market for energy storage systems is expected
to grow at a 34% CAGR from $8 billion in 2020 to $56 billion in
2027, driven primarily by growing deployments of solar and wind
power, as well as a desire to increase the power grid’s resiliency.
ESS’ energy storage systems provide an optimal solution for
utilities, independent power producers and microgrids seeking a
reliable, safe and durable solution for four- to twelve-hour power
storage that doesn’t degrade over time. That is the capability that
ESS iron flow battery technology can deliver.
“The goal of ESS from its inception has been to develop a
fundamentally new, high-performance battery technology,” said ESS
CEO Eric Dresselhuys. “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. We’re excited about today’s announcement
as it marks the beginning of our next chapter to capitalize on
burgeoning opportunities in the long-duration energy storage
market. We are thrilled to team up with ACON S2 to deliver
long-term value for our customers, partners, employees,
shareholders and the planet as a public company.”
Craig Evans, ESS President and Co-founder stated, “Our team
worked diligently for the last decade to create a storage solution
that could provide a meaningful addition to the world’s transition
to a renewable future. We have made incredible strides to that end
and I am very excited about the next phase for ESS and our ability
to accelerate our growth.”
“ESS offers a remarkable technology that is a game-changer in
the world’s transition to clean energy,” said Adam Kriger, CEO of
ACON S2 Acquisition Corp. “With its tremendous market opportunity
and leadership position in cost, performance and sustainability,
ESS has a clear trajectory for growth as it scales. We are thrilled
that this transaction aligns with our mission of combining with a
leader in Strategic Sustainability; when a business’ pursuit of
sustainability—environmental, social and/or economic—is central to
driving its performance and success. We look forward to
collaborating with Eric, Craig and the entire ESS team.”
Transaction Overview
The business combination values the combined company at a $1.072
billion pro forma enterprise value. The transaction will provide
approximately $465 million of pro forma net cash to the combined
company, assuming no redemptions by ACON S2 shareholders. Assuming
no public shareholders of ACON S2 exercise their redemption rights,
ESS’ existing shareholders, including its founders, will own
approximately 64% of the combined company. As part of the
transaction, ACON S2 raised a $250 million fully committed PIPE
from institutional investors including Fidelity Management &
Research Company LLC, SB Energy Global Holdings Ltd, a wholly-owned
subsidiary of SoftBank Group Corp., Breakthrough Energy Ventures
and BASF Venture Capital. In total, investors in the PIPE will own
approximately 16% of the issued and outstanding shares of common
stock of the combined company at closing. The net proceeds from
this transaction will be used to increase manufacturing capacity
globally and invest in extending ESS’ technology advantage.
The Boards of Directors of ESS and ACON S2 have unanimously
approved the transaction. The transaction is expected to close in
the third quarter.
Additional information about the proposed transaction, including
a copy of the business combination and investor presentation, will
be provided in a Current Report on Form 8-K to be filed by ACON S2
with the Securities and Exchange Commission and will be available
on the ESS investor relations page at essinc.com/investors and at
www.sec.gov.
Advisors
Deutsche Bank Securities Inc. is serving as capital markets
advisor and placement agent to ACON S2. Kirkland & Ellis LLP is
serving as legal counsel to ACON S2. Nomura Greentech is serving as
financial advisor and Wilson Sonsini Goodrich & Rosati, P.C. is
serving as legal counsel to ESS. Fried, Frank, Harris, Shriver
& Jacobson LLP is serving as placement agent’s counsel on the
PIPE transaction. Deutsche Bank Securities Inc., Cowen and Company
and Stifel, Nicolaus & Company served as joint-book running
managers for the ACON S2 initial public offering.
Conference Call and Webcast
Information
ESS and ACON S2 will host a joint investor conference call to
discuss the proposed transaction on May 7, 2021, at 8:00 a.m. EDT.
Interested parties may listen to the prepared remarks via telephone
by calling (855) 859-2056 in the U.S., or for international
callers, by calling (404) 537-3406 and entering conference ID
2588795. A telephone replay will be available until May 19, 2021,
by dialing (855) 859-2056 in the U.S., or for international
callers, (404) 537-3406 with conference ID 2588795.
Investor Presentation
A link to the company’s investor presentation and other
resources related to the transaction can be found here:
https://essinc.com/investors/.
About ESS Inc.
ESS Inc. designs, builds and deploys environmentally
sustainable, low-cost, iron flow batteries for long-duration
commercial and utility-scale energy storage applications requiring
from 4 to 12 hours of flexible energy capacity. The Energy
Warehouse™ and Energy Center™ use earth-abundant iron, salt, and
water for the electrolyte, resulting in an environmentally benign,
long-life energy storage solution for the world’s renewable energy
infrastructure. Established in 2011, ESS Inc. enables project
developers, utilities, and commercial and industrial facility
owners to make the transition to more flexible non-lithium-ion
storage that is better suited for the grid and the environment. For
more information visit www.essinc.com.
About ACON S2 Acquisition
Corp.
ACON S2 is a blank check company whose business purpose is to
effect a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one
or more businesses. ACON S2 has a focus on businesses that employ a
strategic approach to sustainability; that is, a business whose
pursuit of sustainability—environmental, social and/or economic—is
core to driving its performance and success. ACON S2’s sponsor is
an affiliate of ACON Investments, L.L.C.
About ACON Investments,
L.L.C.
ACON Investments, L.L.C., headquartered in Washington, DC, is an
international private equity firm investing in North America, Latin
America and Europe. Founded in 1996, ACON has managed approximately
$6 billion of capital to date and has professionals in Washington,
DC, Los Angeles, Mexico City, São Paulo, Bogotá and Madrid. For
more information, visit www.aconinvestments.com.
Additional Information and Where to
Find It
A full description of the terms of the transaction will be
provided in a registration statement on Form S-4 to be filed with
the SEC by ACON S2 that will include a prospectus with respect to
the combined company’s securities to be issued in connection with
the business combination and a proxy statement with respect to the
shareholder meeting of ACON S2 to vote on the business combination.
ACON S2 urges its investors, shareholders and other interested
persons to read, when available, the preliminary proxy
statement/prospectus as well as other documents filed with the SEC
because these documents will contain important information about
ACON S2, the Company and the transaction. After the
registration statement is declared effective, the definitive proxy
statement/prospectus to be included in the registration statement
will be mailed to shareholders of ACON S2 as of a record date to be
established for voting on the proposed business combination. Once
available, shareholders will also be able to obtain a copy of the
S-4, including the proxy statement/prospectus, and other documents
filed with the SEC without charge, by directing a request to: ACON
S2, 1133 Connecticut Avenue NW, Suite 700, Washington, DC 20036.
The preliminary and definitive proxy statement/prospectus to be
included in the registration statement, once available, can also be
obtained, without charge, at the SEC’s website (www.sec.gov).
Participants in the
Solicitation
ACON S2 and ESS and their respective directors and officers may
be deemed to be participants in the solicitation of proxies from
ACON S2’s stockholders in connection with the proposed transaction.
Information about ACON S2’s directors and executive officers and
their ownership of ACON S2’s securities is set forth in ACON S2’s
filings with the SEC. To the extent that holdings of ACON S2’s
securities have changed since the amounts printed in ACON S2’s
Registration Statement on Form S-1, such changes have been or will
be reflected on Statements of Change in Ownership on Form 4 filed
with the SEC. Additional information regarding the interests of
those persons and other persons who may be deemed participants in
the proposed transaction may be obtained by reading the proxy
statement/consent solicitation statement/prospectus regarding the
proposed transaction when it becomes available. You may obtain free
copies of these documents as described in the preceding
paragraph.
No Offer or Solicitation
This press release is not a proxy statement or solicitation of a
proxy, consent or authorization with respect to any securities or
in respect of the potential transaction and shall not constitute an
offer to sell or a solicitation of an offer to buy the securities
of ACON S2, ESS or the combined company, nor shall there be any
sale of any such securities in any state or jurisdiction in which
such offer, solicitation, or sale would be unlawful prior to
registration or qualification under the securities laws of such
state or jurisdiction. No offer of securities shall be made except
by means of a prospectus meeting the requirements of the Securities
Act.
Forward-Looking
Statements
This communication contains certain forward-looking statements,
including statements regarding ACON S2’s, ESS’ or their management
teams’ expectations, hopes, beliefs, intentions or strategies
regarding the future. The words “anticipate”, “believe”,
“continue”, “could”, “estimate”, “expect”, “intends”, “may”,
“might”, “plan”, “possible”, “potential”, “predict”, “project”,
“should”, “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. These forward-looking
statements are based on ACON S2’s and ESS’ current expectations and
beliefs concerning future developments and their potential effects
on ACON S2, ESS or any successor entity of the proposed
transactions. Many factors could cause actual future events to
differ materially from the forward-looking statements in this
presentation, including but not limited to: (i) the risk that the
proposed transactions may not be completed in a timely manner or at
all, which may adversely affect the price of ACON S2’s securities,
(ii) the failure to satisfy the conditions to the consummation of
the proposed transactions, (iii) the occurrence of any event,
change or other circumstance that could give rise to the
termination of the business combination, (iv) the effect of the
announcement or pendency of the proposed transactions on ESS’
business relationships, operating results and business generally,
(v) risks that the proposed transactions disrupt current plans and
operations of ESS, (vi) changes in the competitive and highly
regulated industries in which ESS plans to operate, variations in
operating performance across competitors, changes in laws and
regulations affecting ESS’ business and changes in the combined
capital structure and (vii) the ability to implement business
plans, forecasts and other expectations after the completion of the
proposed transactions, and identify and realize additional
opportunities. There can be no assurance that the future
developments affecting ACON S2, ESS or any successor entity of the
proposed transactions will be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond ACON S2’s or ESS’ control) or other
assumptions that may cause actual results or performance to be
materially different from those expressed or implied by these
forward-looking statements. You should carefully consider the
foregoing factors and the other risks and uncertainties described
in the “Risk Factors” section of ACON S2’s registration on Form S-1
(File No. 333-248515), the registration statement on Form S-4
expected to be filed in connection with the business combination,
and other documents filed by ACON S2 from time to time with the
SEC. These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Except as required by law, ACON S2 and ESS are not undertaking any
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Neither ACON S2 nor ESS gives any assurance that either the ACON S2
or ESS, or the combined company, will achieve its expectations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210507005241/en/
For Investors: Erik Bylin investors@essinc.com 510-315-1004
For Media: Gene Hunt Trevi Communications, Inc. 978-750-0333
ext. 101 gene@trevicomm.com
For ACON S2: Emily Claffey/Julie Rudnick/Kevin Siegel Sard
Verbinnen & Co STWO-SVC@sardverb.com
ACON S2 Acquisition (NASDAQ:STWO)
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