California-based utility-scale energy storage battery manufacturer ESS Technology has announced its merger with ACON S2 Acquisition Corp, a publicly traded special purpose acquisition company (SPAC). The collaboration has led it to become a publicly listed company.

Founded in 2011, ESS has been involved in delivering clean, low-cost, and long-duration energy storage systems to the market.

The business combination values the combined company at a $1.07 billion pro forma enterprise value. According to the announcement, 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’s 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 private investment in public equity 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. In total, investors in the equity will own approximately 16% of the issued and outstanding shares of common stock of the combined company at closing.

The net proceeds from this transaction will be used to scale up manufacturing capacity globally and invest in extending ESS’ technology advantage.

The transaction approval decision was unanimously taken at a meeting of the boards of directors of ESS and ACON S2, with the transaction expected to close in the third quarter.

Commenting on the move, Craig Evans, President, and Co-founder, ESS, stated, “Our team worked diligently for the last decade to create a storage solution that could provide a meaningful addition to the world’s transition to a renewable future. We have made incredible strides to that end, and I am very excited about the next phase for ESS and our ability to accelerate our growth.”

ACON Investments LLC, headquartered in Washington, D.C., is an international private equity firm investing in North America, Latin America, and Europe. Founded in 1996, ACON has managed approximately $6 billion of capital to date.

In January this year, another California-based battery technology company Romeo Power announced that it had completed its business combination with RMG Acquisition, becoming a public entity in the process.

The venture capital (VC) funding for battery storage, smart grid, and energy efficiency companies in Q1 2021 saw a growth of 410% and stood at $1.3 billion, compared to $252 million in Q1 2020, according to Mercom Capital Group’s latest report, Q1 2021 Funding and M&A Report for Storage, Grid, and Efficiency.