X-Energy Reactor Company and Ares Acquisition Corporation announced they have mutually agreed to terminate their previously announced business combination agreement, effective immediately.

The announcement comes on the day X-energy shareholders were set to vote on the merger.

X-energy cited “challenging market conditions, peer-company trading performance, and a balancing of the benefits and drawbacks of becoming a publicly traded company under current circumstances.”

X-energy is developing a small modular nuclear reactor (SMR), a high-temperature gas-cooled reactor known as the Xe-100. The Maryland-based company is also developing its proprietary tri-structural isotropic (“TRISO”) encapsulated particle fuel, TRISO-X.

An investment vehicle affiliated with Ares Management Corporation has agreed to make a private investment into X-energy in order to support X-energy’s continued growth as a private company, the companies said.

Neither party will be required to pay the other a termination fee as a result of the mutual decision to terminate the business combination agreement.

Last year, X-energy announced it would become a publicly-traded company after a business combination agreement with Ares. The merger with Ares would have valued X-energy at about $2 billion, the previous announcement said, and would generate cash proceeds of about $1 billion for X-energy from the trust account of Ares, assuming no redemptions.

In June 2023, the company’s pre-money equity value was revised to $1.8 billion from approximately $2.1 billion to establish “a more attractive entry point for investors.” At that time, X-energy updated cost estimates to complete the full ARDP scope to a total of between $4.75 and $5.75 billion, reflecting higher costs for construction materials and labor, increasing interest rates and supply chain constraints for equipment.

On Oct. 13, the U.S. Securities and Exchange Commission (SEC) declared effective the Registration Statement on Form S-4, essentially determining the business combination to be in compliance with relevant securities laws and regulations.

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