ACON S2 Acquisition Corporation
PROPOSED BUSINESS COMBINATION: ESS Inc.
ENTERPRISE VALUE: $1.072 billion
ANTICIPATED SYMBOL: GWH
ESS Tech, Inc., a manufacturer of long-duration iron flow batteries for commercial and utility-scale energy storage applications, and ACON S2 Acquisition Corp., 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. 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.
TRANSACTION
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.
The net proceeds from this transaction will be used to increase manufacturing capacity globally and invest in extending ESS’ technology advantage.
PIPE
- $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
- Investors in the PIPE will own approximately 16% of the issued and outstanding shares of common stock of the combined company at closing
- PIPE is in shares at $10/share
SPONSOR SUPPORT AGREEMENT & EARNOUT
- ESS shareholders and Sponsor have agreed to vote in favor 0f the business combination
- 16,500,000 earnout shares available at closing to company shareholders
- 50% of the Earnout Stock vests if over any twenty (20) Trading Days within any thirty (30) Trading Day period the VWAP of the shares of Acquiror Common Stock is greater than or equal to $12.50 per share (which shall be equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Acquiror Common Stock occurring on or after the Closing);
- An additional 50% of the Earnout Stock vests if over any twenty (20) Trading Days within any thirty (30) Trading Day period the VWAP of the shares of Acquiror Common Stock is greater than or equal to $15.00 per share (which shall be equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Acquiror Common Stock occurring on or after the Closing).
NOTABLE CONDITIONS TO CLOSING
- The aggregate cash proceeds from STWO’s trust account, together with the proceeds from the PIPE Financing, cash must equal no less than $200,000,000 (after deducting any amounts paid to STWO shareholders that exercise their redemption rights in connection with the Business Combination and net of STWO’s unpaid transaction expenses and liabilities)
NOTABLE CONDITIONS TO TERMINATION
- November 6, 2021 (subject to a one month extension in certain circumstances) (the “Termination Date”)
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 to ESS
- 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
MANAGEMENT & BOARD
Executive Officers
Adam Kriger, 54
Chief Executive Officer & Director
Adam Kriger is Chief Executive Officer and a Director of ACON S2 Acquisition Corp. and Executive Partner in ACON Investments’ private equity group. Mr. Kriger is both a long-term senior executive with experience at world class companies in the food, hospitality and leisure/entertainment industries with a 20+ year track record of driving organic and inorganic growth as well as an entrepreneur in food service. He serves on the board of directors of Funko, Inc. (NASDAQ:FNKO), an ACON Investments portfolio company. Prior to joining ACON Investments, Mr. Kriger was Senior Vice President, Corporate Strategy at The McDonald’s Corporation (2001-2015), responsible for global strategy development and execution driving the future direction of a wide range of aspects of the business. In addition to environmental sustainability leadership in areas of food, agriculture and packaging, McDonald’s has also been a leader in many critical areas of social sustainability nearly from its inception. Its very business model as a franchisor is rooted in social sustainability with local ownership driving a virtuous ecosystem of local employment, human capital development, community development and economic impact. Prior to McDonald’s, Mr. Kriger held similar roles with increasing responsibility from 1988-1999 at The Walt Disney Company and Starwood Hotels, both of which have sustainability credentials in their own areas of strength. He started his career developing his finance and transaction skills at First Boston and Brentwood Capital. He has a B.A. from Stanford and an M.B.A. from Harvard Business School.
John Roush, 55
Chief Financial Officer, Chairman & Director
John Roush is Chief Financial Officer, Chairman and a Director of ACON S2 Acquisition Corp. and an executive advisor to ACON Investments. Mr. Roush has over 30 years of operating experience leading medical, life sciences and industrial technology companies ranging in size from $100 million to $1.1 billion in revenue. Mr. Roush serves on the board of two ACON Investments portfolio companies: Pine Environmental Services LLC and International Imaging Materials, Inc. Mr. Roush also serves on the board of directors of Advanced Energy Industries, Inc. (NASDAQ:AEIS), LeMaitre Vascular, Inc. (NASDAQ:LMAT) and Applied LifeSciences & Systems, an early stage company developing vaccination technology to enable antibiotic free poultry. Prior to his work with ACON Investments, Mr. Roush served as CEO of Novanta Inc. (NADSAQ:NOVT), a global supplier of precision photonic components and subsystems. He previously served as President of the $1.1 billion Environmental business for PerkinElmer, Inc. (NYSE:PKI), which supplies analytical technology and services in the air, water, soil and food safety verticals. Earlier in his career, Mr. Roush held various operating leadership roles with Honeywell (NYSE:HON) and General Electric (NYSE:GE) and also worked at McKinsey & Company, a U.S.-based management consulting firm. Mr. Roush received a B.S.E.E. from Tufts University and an M.B.A. from Harvard Business School.
Board of Directors
Jonathan Ginns, 56
Director
Jonathan Ginns is a Director of ACON S2 Acquisition Corp. and a Founder and Managing Partner of ACON Investments. Mr. Ginns often serves on the board of ACON Investments fund/investment vehicle portfolio companies. Among his current positions, Mr. Ginns serves on the board of Sequitur Energy Resources, LLC. Mr. Ginns has also previously served on the boards of directors of several public companies including Mariner Energy, Inc. (NYSE:ME) and Northern Tier Energy LP (NYSE:NTI), each ACON Investments fund portfolio companies, and Optimal Group, Inc (NASDAQ:OPMR). Mr. Ginns received a B.A. in History from Brandeis University and an M.B.A. from Harvard Business School.
Daniel Jinich, 54
Director
Daniel Jinich is a Director of ACON S2 Acquisition Corp. and is a Managing Partner at ACON Investments. Prior to joining ACON Investments in 2000, Mr. Jinich was a Senior Investment Professional with HM Capital Partners (f/k/a Hicks, Muse, Tate & Furst), an international private equity firm specializing in leveraged buyouts. Prior to HM Capital Partners, Mr. Jinich worked for the Merchant Banking Group at Bankers Trust Company, a bank holding company. Mr. Jinich often serves on the board of ACON fund/investment vehicle portfolio companies. Among his current positions, Mr. Jinich serves on the boards of BioMatrix Holdings, L.L.C and Injured Workers Pharmacy LLC. He previously served on the boards of ImpreMedia, LLC, Magic Media Inc., Peter Piper, Inc. and Radiovisa, LLC, among other prior ACON Investments fund/investment vehicle portfolio companies. He is a Member of the YPO Gold U.S. Capital Chapter and Finance Committee Chair for the Bridges Public Charter School. Mr. Jinich received a B.A. in Economics from the University of Pennsylvania and an M.B.A. from Harvard Business School.
Sarah Kirshbaum Levy, 49
Independent Director
Bio not provided in most recent prospectus
Ryan Shadrick Wilson, 44
Independent Director
Bio not provided in most recent prospectus
Janie Goddard, 49
Independent Director
Bio not provided in most recent prospectus