NEXT Renewable Fuels (NXT), founded in 2016, will combine with Industrial Tech Acquisitions II (ITAQ), a special purpose acquisition company (SPAC) that was publicly listed in Jan’22 on the Nasdaq Global market. The combined entity will have a post-money, pro forma enterprise value (EV) of $530mn, which accounts for the ~$173mn in cash raised by ITAQ via its IPO. Under the merger, all pre-closing stockholders and holders of NXT’s convertible debt will receive common stock of ITAQ, which will continue to operate as a listed company under the name NXTCLEAN Fuels. The transaction is expected to be closed in Q2 2023.
NXT’s flagship project is a $2bn clean fuels production plant at Port Westward in Oregon. The facility will have an output capacity of 50,000 barrels/day of sustainable aviation fuels (SAF) and renewable diesel, which will account for 90% of the plant’s total production. The facility is currently in the permitting stage, with the commencement of commercial operations scheduled for 2025. The company expects to generate a revenue of $1.92bn in 2026 from the project, with an average-weighted revenue of $2.92bn annually, during 2026-2029. Further, NXT estimates generating an EBITDA of $588mn in 2026, increasing to a yearly average of $918mn during 2026-2029. As per NXT, the United States currently produces 450 million barrels of biofuels annually, while demand is expected to grow to 600 million barrels in the next 15 years.
As per Enerdatics’ research, the emergence of biofuels as a value-accretive renewables investment has spurred a sharp rise in the number of corporate consolidations, specifically in the United States. The country has witnessed more than $9bn of corporate takeovers in 2022 alone, with the year’s largest deal so far being bp’s acquisition of Archaea Energy for $4.1bn, last month.
Interestingly, Archaea Energy was formed through a business combination with Aria Energy and Rice Acquisition Corp in Apr’21, in a deal valued at ~$1.1bn. The combined company’s EV increased to $4.1bn in approximately a year-and-a-half, driven primarily by its cash-generating operational assets and massive development pipeline. Enerdatics estimates that the bp-Archaea deal valued Archaea Energy at a staggering 46 times the last twelve months (LTM) EBITDA, which is representative of the value investors attribute to clean fuel facilities.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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