X-energy, Ares drop merger plan

In December last year, X-energy and AAC - a publicly traded special purpose acquisition company affiliated with global alternative investment manager Ares Management Corporation - entered into a definitive business combination agreement. The combination was set to establish X-energy as a publicly traded company, a move that was expected to accelerate the company's growth strategy.

At that time, the business combination ascribed a pre-money equity value of approximately USD2 billion to X-energy, the companies said. The transaction, which had been unanimously approved by the boards of directors of both companies and by members of X-Energy, was expected to be completed in the second quarter of 2023 subject to closing conditions including the approval of AAC shareholders and the receipt of governmental and regulatory approvals.

In June, X-energy and AAC announced a strategic update to their business combination agreement that revises the valuation of the transaction. Under the amended terms, X-energy's pre-money equity value was revised to USD1.8 billion. In September, Ares increased its total investment to USD80 million through a USD50 million PIPE investment on top of the USD30 million initial investment it announced last December.

However, in a joint statement the companies have now said: "Over the course of 2023, X-energy received strong interest from potential investors. However, given challenging market conditions, peer-company trading performance and a balancing of the benefits and drawbacks of becoming a publicly traded company under current circumstances, X-energy and AAC jointly determined that it was the best course of action at this time not to proceed with their previously announced transaction."

They added that an investment vehicle affiliated with Ares Management Corporation has agreed to make a private investment into X-energy "in order to support X-energy's continued growth as a private company".

"In view of the termination of the Business Combination Agreement, AAC determined that it will not be able to consummate an initial business combination within the time period required by its amended and restated memorandum and articles of association," the statement said. "As such, AAC intends to dissolve and liquidate in accordance with the provisions of the articles."

X-energy is the developer of the Xe-100 pebble bed high-temperature gas reactor, capable of a thermal output of 200 MW (or 80 MW electrical). It uses fuel made from robust TRISO (tri-structural isotropic) fuel particles which are able to withstand extremely high temperatures without melting. Optimised as a four-unit plant delivering 320 MWe, the reactor can provide baseload power to an electricity system or use its thermal output to support industrial applications with high pressure, high temperature steam.

In January this year, X-energy announced a strategic investment of USD25 million from South Korea's DL E&C and Doosan Enerbility. The investment was made in a private round of financing pursuant to X-energy's previously announced Series C-2 investment round to support the advancement of the global deployment of its Xe-100 SMR.

"The X-energy team will continue to make critical progress toward our long-term objectives," said X-energy CEO Clay Sell. "Looking ahead, we will continue to execute against our strategy that capitalises on our proprietary clean energy technology, competitive advantages and strategic relationships to the benefit of our customers and stakeholders around the world."

NuScale Power was the first SMR developer to undergo a business combination to accelerate the commercialisation of its technology. In May 2022, it merged with Spring Valley Acquisition Corp to create the world's first publicly traded SMR technology provider.