Data center battery manufacturer ZincFive has agreed to become a public company through a merger with the special purpose acquisition company Spark I Acquisition Corp. (SPKL.US), which is backed by SparkLabs Group, at a pre-money valuation of $600 million.
The boards of both companies have approved the transaction, which is expected to close in the second half of this year, with the combined company's shares to trade on the Nasdaq under the ticker symbol "ZFIV".
According to a statement, Oregon-based ZincFive doubled its revenue last year to $69.9 million and plans to use the proceeds from the deal to expand production, including fulfilling an $81 million order backlog as of December 31.
The transaction is expected to provide at least $100 million from a private investment in public equity (PIPE) financing, plus up to $25 million from Spark I Acquisition Corp.'s trust account.
Existing ZincFive shareholders will roll all of their equity into the combined company.
ZincFive CEO Tod Higinbotham stated that the capital will be used to expand capacity at the company's two factories in China and that it is considering building a third plant in the United States.
He highlighted that the advantages of going public via a SPAC include a faster timeline and lower transaction costs.
"For us, getting the capital is critical. We have backlog, we have capacity, we have demand. We really need the capital," Higinbotham said.
He explained that the company's nickel-zinc batteries are better suited than other battery types for backing up data center generators because they can instantly deliver the full power load needed to start a generator during an outage.
Nickel-zinc batteries offer other benefits, such as being non-flammable and easier to recycle, but they discharge faster and are not suitable for long-term replacement of power sources like diesel generators, lithium-ion, or lead-acid batteries.
"We are the only company in the world supplying nickel-zinc batteries to data centers," said co-founder and board member Tim Hysell, who handed the CEO role to Higinbotham last September as part of the public listing plans.
Higinbotham noted that the support from SparkLabs and its network of startup accelerators and venture capital funds was part of what made the Spark I deal attractive.
SparkLabs' advisors include Vint Cerf, a co-inventor of fundamental internet protocols, and its investment portfolio includes AI firms Anthropic and OpenAI, cryptocurrency exchange Kraken, and the messaging and video application Discord.
James Rhee, CEO and Chairman of Spark I SPAC, described the merger talks with ZincFive as "a very short courtship," stating that discussions quickly moved to how SparkLabs could support the company.
Rhee said he expects ZincFive's batteries to become a key design consideration for hyper-scale data centers.
He pointed out that beyond providing the peak power needed to start generators, the company's batteries can handle the energy spikes required when data centers synchronize data without generating excessive heat.
Comments