Solar EV charging provider Beam Global announced Feb. 23 it has entered into a definitive asset purchase agreement to acquire AllCell Technologies, a maker of energy storage solutions and technologies. The all-stock transaction is expected to close March 1 subject to customary closing conditions.
Beam (Nasdaq: BEEM, BEEMW) will host an investor call to discuss the transaction on March 1, 2022 at 1:30 p.m. PT / 4:30 p.m. ET. A recorded video interview with Beam CEO Desmond Wheatley discussing the deal is live on the Beam blog.
Management expects the acquisition of AllCell to impact Beam Global by increasing and diversifying revenues and gross profits; significantly reducing cost of goods sold (COGS); enhancing foundational intellectual property portfolio; securing Beam Global’s vital battery supply chain; accelerating product development cycles; combining customer facing roles and outreach; adding new customer segments; increasing barriers to entry for future competition; and enhancing Beam’s position as a leader in the green economy
AllCell’s highly flexible battery platform architecture, used in Beam’s products for 10 years, is ideally suited for applications where energy density, safety and bespoke enclosures require high power in small spaces. Drones, submersibles, recreational products and a host of micro mobility and electric vehicle products are already benefiting from AllCell’s products.
Beam’s patented EV Standard and UAV ARC will require battery pack formats which are optimized for each product’s unique attributes. The acquisition of AllCell will help speed up these developments while cutting costs. Energy storage is crucial to Beam Global’s value proposition. Battery systems account for about 30% of Beam Global products’ bills of materials. The strategic acquisition of AllCell will reduce the cost of goods sold through margin recapture and value engineering. Management anticipates about a 7% reduction in material costs in the near term as a result of margin recapture followed by increasing reductions in costs as the Beam Global and AllCell engineering teams identify further improvements.
“This acquisition deepens and widens the moat around our first-to-market leadership position in several rapidly growing and very large markets,” said Beam Global CEO Desmond Wheatley in the news release. “AllCell brings a team comprised of some of the energy storage industry’s finest scientists, engineers and operations and manufacturing leaders. Combining our companies will enable each of us to do what we do better while taking advantage of the tremendous growth opportunities through cross selling, increased market penetration, and leveraged cost structures.”
Said Al-Hallaj, co-founder and chief battery scientist at AllCell Technologies, said, “Sustainability, safety and high power are the cornerstones of the technology and IP portfolio we’ve developed at AllCell. Success to us is solving the complex challenge that joins longer battery life, more efficient materials use and higher energy density — all while improving safety.”
As a result of the all-stock structure of the acquisition, Beam Global’s strong cash balance will continue to be used for further growth and strategic initiatives. In consideration for the sale of AllCell assets, the AllCell shareholders will receive 1,055,000 shares of Beam Global restricted common stock at closing. Beam Global’s existing shareholders will own 90.3% upon closing of the acquisition and Beam Global will retain operational and board control of the company. The AllCell shareholders may also receive additional restricted shares of common stock, through an earn-out, valued at two times any revenues and contracted backlog, generated from the AllCell assets, that are greater than $7.5 million in 2022, and on any AllCell 2023 revenue over $13.5 million or 135% of 2022 revenue, whichever is greater, and capped at $20 million in revenues.
Any revenue from AllCell products used in Beam Global’s core product portfolio are excluded from the earn-out calculation. Beam Global will issue AllCell shareholders restricted shares for both the closing consideration and any earn-out payments. In the event of the lifting of restrictions on the Beam Global common stock issued to AllCell, the purchase agreement provides that AllCell will limit any sale of such shares to no more than 4% of the average weekly volume during such trading week.
“As AllCell’s largest shareholder, we believe the strategic combination of Beam Global and AllCell creates a powerful organization at the beginning of this massive transportation and electrification shift,” said Townsend Capital Chairman, Dennis Townsend. “As a result of this powerful combination, we have decided to roll 100% of our equity into Beam Global.”
Both companies have been providing clean energy solutions to multiple modes of the electric transportation sector throughout their histories. Beam Global and AllCell have, separately, provided charging and high-powered energy storage solutions to micro-mobility, land based EVs, aviation, maritime and recreational customers as well as stationery and energy-security platforms, for both government and Fortune 100 companies. Management believes that the strategic business combination will create an unbeatable platform of energy generation and storage which will enable charging companies, vehicle manufacturers, energy security providers and the many other applications driven by the increasing push to an electrified and untethered world.
Beam Global’s corporate headquarters and factory will remain at its 53,000 square foot facility in San Diego, California. The AllCell team and manufacturing facility will remain in Broadview, Illinois. The Beam and AllCell teams intend to integrate rapidly and explore an expansion of battery manufacturing in California, which offers large government incentives to do so. Management will also consider an expansion of Beam Global’s product manufacturing in the Midwest. The AllCell team brings to Beam world-renowned chief battery scientist Said Al-Hallaj as well as deep engineering and manufacturing experience from Argonne National Laboratory, Ford Motor Company, Stellantis, Johnson Controls, AVL Powertrain and the Illinois Institute of Technology.
Beam Global’s acquisition of AllCell combines two U.S.-based clean technology innovators and manufacturers into a stronger, more globally competitive company in clean technology innovation.