Nearly one year ago, privately held experimental small modular nuclear reactor (SMR) company X-Energy announced plans to reverse-merge itself into special purpose acquisition company (SPAC) Ares Acquisition Corporation (AAC +0.00%) in a $2 billion transaction targeting a nuclear power market that could be worth $1 trillion by 2050.
One year later, the deal is a bust.
On Tuesday, X-Energy and Ares Acquisition announced they have mutually agreed to terminate their business combination -- and as of 10:15 a.m. ET, Ares stock is up 9.2% on the news.
NYSE: AAC
Key Data Points
Why call off the merger?
Despite X-Energy saying it has "received strong interest from potential investors," the two companies were convinced by "challenging market conditions [and] peer-company trading performance" that now is not a propitious time to bring a nuclear power company public. Accordingly, Ares says it has called off a planned extraordinary general meeting, originally scheduled for today, to approve the transaction -- and will scuttle it instead.
Furthermore, because Ares has no other private companies it is interested in bringing public (at least not that it can bring public before the deadline set by its own articles of association), the SPAC intends to dissolve itself and return its capital to its shareholders.
What happens next?
"The X-Energy team will continue to make critical progress toward our long-term objectives," said CEO J. Clay Sell. To assist with this, "an investment vehicle affiliated with" Ares will make a private investment in X-Energy.
But for current Ares shareholders, that's now irrelevant. Ares itself will halt trading of its stock on Nov. 6 and cancel its shares on Nov. 7. Investors who currently own shares will receive approximately $10.79 per share in compensation. Not coincidentally, that's almost precisely how much Ares shares are being valued at after today's jump.
Whether you sell the stock today, or wait until Nov. 7 to have it sold for you, therefore, really makes little difference.
