Li-Cycle Corp, a Toronto-based lithium-ion battery resource recycling company, has agreed to merge with Peridot Acquisition Corp, a special purpose acquisition company. The deal, which reflects an equity value of about $1.67 billion, will give Li-Cycle a listing on the New York Stock Exchange. It includes a $315 million investment from Neuberger Berman Funds, Franklin Templeton and Mubadala Capital, as well as Peridot sponsor Carnelian Energy Capital, Moore Strategic Ventures and Traxys.
TORONTO & HOUSTON–(BUSINESS WIRE)–Li-Cycle Corp. (“Li-Cycle” or “the Company”), a commercial leader in lithium-ion battery resource recovery, and Peridot Acquisition Corp. (“Peridot”) (NYSE: PDAC), a publicly-traded special purpose acquisition company sponsored by Carnelian Energy Capital, announced their entry today into a definitive business combination agreement that will result in Li-Cycle becoming a public company. Upon closing of the transaction, the combined company will be renamed Li-Cycle Holdings Corp. and will be listed on the New York Stock Exchange under the new ticker symbol “LICY.” The combined company will be led by Ajay Kochhar, Co-Founder, President and Chief Executive Officer of Li-Cycle, and Tim Johnston, Co-Founder and Executive Chairman.
Company Overview and Investment Highlights
Founded in Toronto in 2016, Li-Cycle is an industry-leading lithium-ion battery resource recovery company and the largest lithium-ion battery recycler in North America. Li-Cycle sits at the intersection of three core megatrends:
The electric vehicle revolution
The supply shortage of strategic battery materials
The need for a truly sustainable, ESG-friendly lithium-ion battery recycling solution, a critical missing step in the battery supply chain
The imperative for economically and environmentally sustainable resource recycling is growing in lockstep with the exponential growth of battery manufacturing. Li-Cycle utilizes its patented Spoke & Hub technologies to achieve the industry-leading recovery rate and produce the scarce battery materials underpinning the global growth in electric vehicle penetration. Legacy recycling technologies have largely relied on thermal operations, which can emit harmful emissions and result in lower recovery rates. Li-Cycle’s two-stage battery recycling model enables customers to benefit from a safe and environmentally friendly solution for recycling all types of lithium-ion materials.
Key investment highlights are as follows:
Material Demand and Strong Macroeconomic and Regulatory Tailwinds – The massive global shift toward electrification, increasingly stringent environmental regulations and rising clean energy infrastructure spending are accelerating the demand for lithium-ion battery materials and recycling solutions.
Patented Technology Provides up to 95% Resource Mass Recovery – Underlying technologies are protected by 18 patents/patent applications that tie back to three core patent families, providing a durable competitive moat. Li-Cycle’s scalable, sustainable, safe and proprietary Spoke & Hub system provides up to 95% resource mass recovery, and is lithium-ion battery chemistry and charge agnostic.
Spoke and Hub Technologies – Spokes are decentralized facilities to mechanically process batteries close to sources of supply while Hubs are centralized facilities for large-scale production of specialty materials to achieve economies of scale in recycling.
Low-Cost Producer of Battery Grade Materials – Li-Cycle is uniquely able to economically recover core battery grade materials, including lithium carbonate, nickel sulphate and cobalt sulphate, at a lower cost than mined materials.
Environmentally Friendly – Li-Cycle’s process does not require high temperatures, no wastewater is produced, and only low level emissions are generated from operations.
Robust Customer Network – Li-Cycle has 40+ commercial contracts with blue chip suppliers and off-take agreements through 2030, corresponding to a cumulative forecasted EBITDA between 2021 and 2025 of $985 million. More than $300 million/year of revenue is to be generated from contracted off-take agreements with Traxys, both an investor in the PIPE and an existing strategic partner. The Company’s commercial battery supply customers include 14 of the largest global automotive and battery manufacturers.
Ajay Kochhar, Co-Founder, President and Chief Executive Officer of Li-Cycle, commented, “Li-Cycle’s patented technology is proven in the North American market as the leading way to recycle lithium-ion batteries and re-use recovered materials to make new batteries in a truly circular and sustainable manner. The capital raised in this transaction will fully fund our planned global growth. We are excited to partner with the Peridot team and enter the public markets, deliver on our mission and create long-term value for our customers, employees and shareholders.”
Tim Johnston, Co-Founder and Executive Chairman of Li-Cycle, commented, “We see a tremendous global market opportunity in front of us driven by the exponential growth of the electric vehicle market. Our ‘future proofed’ technology can recycle any battery chemistry economically, and our closed-loop solution provides the essential raw material building blocks for batteries that are in critical demand. The partnership with the Peridot team is an exciting and important milestone in Li-Cycle’s journey, further enabling Li-Cycle to achieve our mission and grow in lockstep with our customers – in North America and globally.”
Alan Levande, Chairman and Chief Executive Officer of Peridot who will join Li-Cycle’s Board of Directors, said, “Li-Cycle is at the forefront of one of the most crucial and under-penetrated markets in clean technology that is growing in lock-step with the electrification of mobility. As the North American market leader, we believe Li-Cycle is a unique and compelling ESG investment opportunity for investors looking to participate in the global energy transition. We are delighted to partner with Li-Cycle to advance and scale its disruptive technology.”
The business combination includes a pre-money equity valuation for Li-Cycle of $975 million and, when combined with the transaction proceeds, represents a combined company pro forma equity value of $1.67 billion. The transaction will provide $615 million in gross proceeds to the Company, assuming no redemption by Peridot shareholders, including a $315 million fully committed, upsized common stock PIPE at $10.00 per share from investors that include Neuberger Berman Funds, Franklin Templeton and Mubadala Capital, as well as Peridot sponsor Carnelian Energy Capital, existing Li-Cycle investors including Moore Strategic Ventures, and global marketing and strategic off-take partner Traxys.
The Boards of Directors of each of Li-Cycle and Peridot have unanimously approved the transaction. The transaction will require the approval of the shareholders of both Li-Cycle and Peridot, and is subject to other customary closing conditions, including the receipt of certain regulatory approvals. The transaction is expected to close in the second quarter of 2021. 100% of Li-Cycle’s shareholders will roll their equity holdings into the new public company.
Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Peridot with the Securities and Exchange Commission (“SEC”) and will be available on the Li-Cycle’s Investor Relations page at www.li-cycle.com/investors and at www.sec.gov.
Citi is serving as sole financial advisor to Li-Cycle. Cowen is serving as capital markets advisor to Li-Cycle. UBS Investment Bank is serving as lead placement agent and Barclays and Citi are serving as placement agents for the PIPE. UBS Investment Bank and Barclays are also serving as financial and capital markets advisors to Peridot. McCarthy Tétrault and Freshfields Bruckhaus Deringer are serving as legal advisors to Li-Cycle. Kirkland & Ellis and Stikeman Elliott are serving as legal advisors to Peridot. INFOR Financial Inc. has provided a fairness opinion to the Board of Directors of Li-Cycle.
Investor Conference Call Information
Peridot and Li-Cycle will host a joint investor conference call to discuss the proposed transaction Tuesday, February 16, 2021 at 8:00am ET.
Interested parties may listen to the prepared remarks call via telephone by dialing 1-877-407-4018 (U.S. toll free) or 1-201-689-8471 (international callers) and entering the conference ID number 13716354. A telephone replay will be available until March 2, 2021 by dialing 1-844-512-2921; international callers should dial 1-412-317-6671 and enter the passcode 13716354.
About Li-Cycle Corp.
Li-Cycle Corp. (Li-Cycle) is on a mission to leverage its innovative Spoke & Hub Technologies to provide a customer-centric, end-of-life solution for lithium-ion batteries, while creating a secondary supply of critical battery materials. Lithium-ion rechargeable batteries are increasingly powering our world in automotive, energy storage, consumer electronics, and other industrial and household applications. The world needs improved technology and supply chain innovations to better manage battery manufacturing waste and end-of-life batteries and to meet the rapidly growing demand for critical and scarce battery-grade raw materials through a closed-loop solution. For more information, visit https://li-cycle.com/.