Battery Recycler Li-Cycle Gets SPAC Merger Deal

North America’s largest lithium-ion battery recycling company is going public in a SPAC merger.

The SPAC Deal: Li-Cycle is going public with Peridot Acquisition Corp PDAC in a deal valuing the former at $1.6 billion.

Li-Cycle will get $615 million in gross proceeds from the SPAC merger, which the company said will fully fund its global expansion.

Shares will trade as "LICY" on the NYSE after the merger is approved. Current Peridot Acquisition shareholders will own 18% of the company after the merger.

About Li-Cycle: Using a proprietary method, Li-Cycle is able to recover high-grade materials from end-of-life batteries. The method creates a closed loop domestically sourced lithium-ion battery supply chain.

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Li-Cycle has over 40 commercial contracts in place with blue-chip suppliers and agreements signed through 2030.

The company sites at the intersection of three core megatrends, according to the presentation: Electric vehicle revolution, supply shortage of battery materials and a sustainable battery recycling solution are trends the company is tackling.

Li-Cycle operates with a patented spoke and hub method, which the company said sets them apart and provides industry-leading recovery rates of materials. Spokes are facilities that mechanically process batteries close to sources of supply. Hubs are facilities in the large-scale production of specialty materials.

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Growth Ahead: Li-Cycle could be positioned to be a leader in the lithium-ion battery recycling with differentiating factors. Current legacy recycling technologies use thermal operation and emit harmful emissions and also have lower materials recovery rates.

Li-Cycle has a 95% resource recovery rate with its battery recycling technology. The strong recovery rate could be good for future growth.

California is requiring a recovery rate of close to 100% by 2022. China has rules in place for materials recovery of 80% or more.

The company has two commercial spokes in place with plans to complete its first hub in the fourth quarter of 2022.

Li-Cycle has a five-year rollout plan to have three spokes and one hub in North America, six spokes in Europe and 11 spokes and three hubs in the APAC/China region.

Financials: Today with two spokes in place, the company can recycle 10,000 tons a year. By 2025, the company will be able to recycle over 100,000 tons a year.

Revenue is forecasted at $12 million for fiscal 2021 and $75 million for fiscal 2022. The company forecasts revenue to hit $958 million in fiscal 2025, with $303 million of the figure already contracted.

Li-Cycle sees revenue growing at a compounded annual growth rate of 82% from 2021 to 2025.

Price Action: Shares of Peridot Acquisition are up 3.5% to $14.34 on Tuesday. Shares traded over $17 in pre-market trading.