Top 3 SPAC Targets – Battery Makers

After a quiet stretch in the SPAC market, we pressed pause on this column. But with deal flow picking up, targets getting more creative, and sponsors back in hunting mode, it’s the right time to bring back one of our favorites: the Top 3 SPAC Targets. Read on to see who we picked for private targets among cutting-edge battery manufacturers.

SPACInsider has used this series in recent weeks to look at a number of ways that SPACs can play a role in boosting companies that are increasing in prominence due to the stresses foisted on the market by the Iran war. Earlier focuses in this vein were on agriculture and alternative fuels targets, and oil shortages have the chance to put more wind in the sails of companies electrifiying the energy chain with new battery designs as well.

For Kensington IV target Amprius (NYSE:AMPX), the year started off with a management shuffle that brought in a brand new CEO, but it has since nearly doubled its stock price to $14.72. The company’s EBITDA margins have been very tight, but with its rising book of orders for EV batteries, it could still see more upside ahead.

For the US to continue to meet its own supply goals and keep up, it may need steadily more companies to step up.

SK On

SK On is a company that is both stepping up and into the US, as the South Korea-based battery manufacturer has been signing agreements with clients to make a major market entry into the country over the past year.

In September, it agreed to provide up to 7.2 GWh of battery energy storage systems (BESS) for Flatiron Energy Development, which is itself working to develop a series of utility-scale BESS projects predominately in New England. It is also working with fellow South Korean battery maker L&F to boost its own supply chain of cathode materials to be able to meet the demands of the North American market.

On the EV side, SK On has agreed to provide about 100GWh-worth of batteries to automaker Nissan (TYO:7201), to be put in the next round if its electric vehicles to be produced at its Canton, Mississippi assembly plant. The company hasn’t shared how much revenue it expects to stir up through this North American work, but it already claimed about 13 trillion won ($8 billion) worth of total revenue as of the end of 2023.

The company has also been busy with other internal restructuring work to make it ready to fully seize the opportunity in the US. Its parent company is SK Group, one of the largest conglomerates in South Korea, and early last year SK On merged with two sister subsidiaries SK Enterm and SK Trading International in moves that were expected to add 500 billion SK won ($33 million) in annual EBITDA to its books.

SK Group has been open about the idea that SK On could be its first publicly listed wing, but, as of 2024, the parent company was continuing to put off SK On’s IPO to a 2028 window. If the company were to want to solidify its presence and liquidity in the US market but is concerned with whether it could get an IPO roadshow through a reasonable timeframe, a SPAC could provide that certainty.

Sonnen

Sonnen is also a division of a much larger entity, but it has maintained the DNA of an independent technology firm.

It provides residential, commercial and utility-scale BESS systems, designed to allow individual consumers and businesses to lower their bills by storing their own solar power on site and even sell some back to the grid. Through its partner Solarite, it has begun offering these systems in Texas for $20 per month with no installation costs for the batteries.

As of February, 3,000 customers had already enrolled in the program in the state, presenting about 600 MWh in total storage capacity and the company plans to more than triple that before the end of the year. It has similar programs rolling out for New England, California and Puerto Rico.

Back in 2019, Sonnen was bought out by Dutch oil producer Shell (NYSE:SHEL) at a time when it was primarily focused on the German energy market. Today, the rationale for its parent to float a portion of its position in Sonnen is similar to that of SK Group – gain liquidity and potentially a higher trading price for Sonnen standing on its own rather than part of a much larger more diversified energy group.

Shell has also been trimming some of its renewable portfolio of late. It sold stakes in US wind and solar projects in 2023 and was reported at one point to be looking to divest about one quarter of its solar and storage assets. At the time, it was reportedly seeking to put more focus into increasing its oil output amid high commodity prices – a situation that has only intensified since

Form Energy

For Form Energy, the big rush in demand for its iron-air batteries looks secure even if the Middle East were to suddenly calm down.

Last week, it signed an agreement to provide 12 GWh of BESS systems to AI data center firm Crusoe, adding to an order backlog that has already grown to 75 GWh. It has recently added its first international deployment to the books with a site in Ireland and is seeing its unique technology quickly come to the forefront.

Form’s iron-air batteries run on a reversible rusting principles that allow for much longer charges across multiple days as opposed to lithium-ion batteries whose full-charge length is typically measured in the hours. The materials for Form’s batteries are also not under supply pressures like lithium. Its principal components are all made out of iron, water and air.

The company is also far more ready for primetime than the bulk of the battery makers that went public via SPACs during the 2020-2021 rush. It already completed construction of its 550,000 square-foot battery factory in 2024, and has plenty of commercial business lined up. So, it is unlikely to fall under the same cash crunches that some of its de-SPAC predecessors did.

But, it does have an investor base that is likely eager for a major capital move that would give it liquidity. Form Energy’s buildout has been funded by $1.2 billion in private capital raises from technology investors dating back to its founding in 2017, the most recent being a $405 million Series F led by T. Rowe Price in 2024.

T. Rowe Price might be willing to hop into a PIPE for the firm as it has for 12 other SPAC deals through the years. And, while many other of Form Energy’s investors may want to stay long like European industrial Group ArcelorMittal (NYSE:MT), the company has also had a fair amount of venture money locked into its cap table that likely wouldn’t mind moving on to the next big idea.