X-energy, Ares call off merger plan

The agreement, announced last December, would have established X-energy as a publicly traded company. Entry into the public markets was expected to accelerate the firm’s growth strategy through additional investment opportunities and financial flexibility. Both the X-energy and AAC boards of directors unanimously approved the proposed transaction, originally expected to close in the second quarter of 2023.

The business combination initially ascribed a pre-money equity value of approximately $2 billion to X-energy, according to the December announcement. The companies revised that valuation to $1.8 billion in June of this year, saying that “by establishing a more attractive entry point for investors, X-energy and AAC believe the revised valuation reinforces the long-term value creation opportunity for, and the companies’ alignment with, shareholders.”

The problem: In this week’s announcement, the companies said that while X-energy has received strong interest from potential investors over the course of 2023, due to “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.”

The announcement also noted that neither party will be required to pay the other a termination fee for the failed deal and that AAC “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” and will therefore “dissolve and liquidate in accordance with the provisions of the articles.”

Official words: “The X-energy team will continue to make critical progress toward our long-term objectives,” said J. Clay Sell, chief executive officer of X-energy. “Among our notable accomplishments in the last year, we have advanced the initial deployment of four Xe-100 units with Dow on the Texas Gulf Coast, signed a joint development agreement with Energy Northwest for up to 12 Xe-100 units in central Washington, progressed the Xe-100 from basic design to the final design readiness review phase, and signed cooperative agreements with both the U.S. Department of Defense and U.S. Department of Energy to further advance the development of a mobile microreactor design. Looking ahead, we will continue to execute against our strategy that capitalizes on our proprietary clean energy technology, competitive advantages, and strategic relationships to the benefit of our customers and stakeholders around the world.”

Said David Kaplan, cochair and CEO of AAC and cofounder, director, and partner of Ares Management Corporation: “While the persistently volatile public market conditions over the course of 2023 have led to this mutual decision, we remain steadfast in our belief in X-energy’s exceptional talent, differentiated nuclear technology, and mission to deliver affordable, zero-carbon energy on a global scale. We remain unwavering in our belief in the significant market opportunity for X-energy, and we look forward to supporting the company through its successes ahead.”