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Nano One Materials Corp (TSX:NANO) has entered into a binding agreement to acquire all of the outstanding shares of Johnson Matthey Battery Materials for approximately C$10.25 million. The acquisition is fully funded and is on a cash-free, debt-free basis, subject to certain working capital adjustments.

JMBM Canada includes a team with over 360 years of collective experience, including R&D, pilot to commercial scale cathode production and product qualification and quality assurance systems expertise for tier 1 automotive lithium-ion cell manufacturers. It brings with it a 2,400 tonne per annum capacity LFP production facility located in Candiac, Québec, occupying approximately one tenth of the 400,000 square foot property.

The transaction is expected to complete by the end of 2022, subject to JMBM Canada fulfilling contractual commitments and certain other customary closing conditions.

Is this a good deal for Nano One?

The deal fits in well with Nano One’s existing scale up ambitions, which are focused on Quebec. It should help to fast track this scheme. The facility is in Greater Montreal and strategically located in proximity to employees and their families, international airports, major port facilities and is a critical link in the mines-to-mobility initiative.

“The rapidly expanding need for responsibly produced cathode materials in North America presents an opportunity for Nano One to deploy its technology and become a leader,” said Nano One’s CEO Dan Blondal. “This complements Nano One’s technology innovation center and team in Burnaby, British Columbia, and is a perfect base for the advancement, expansion and acceleration of our commercialization strategy.”

Nano One also now gets access to all the expertise of the Johnson Matthey team. They have auto supply Tier 1 manufacturing experience, which will stand the company in good stead as it scales up its ambitions within the auto sector. The deal should also help to accelerate Nano One’s strategic plans.

Liam Condon, Chief Executive of Johnson Matthey, explained: “We have worked with Nano One on a number of projects over the last year and having seen their innovations, we believe they have the potential to develop the Candiac site in the best way possible. We remain at the Candiac site until the end of the year and are fully committed to serving the needs of our customers.”

How well-positioned is the Candiac plant?

The Candiac production facility was acquired by Johnson Matthey in 2015 and has been in operation since 2012. It is a supplier of lithium iron phosphate (LFP) cathode material to the lithium-ion battery sector for both automotive and non-automotive applications for a select group of customers. Strategically located in Candiac, Québec, it has the benefit of access to a North American ecosystem which will serve the broader global community with cost-effective, resilient, and environmentally sustainable cathode materials.

Earlier this month Nano One announced major plans to scale up its existing battery technology processes for commercial qualification and production. Previously it had worked with partner firms, leveraging is proprietary technology on a licensed basis. It is now planning the construction of a multi-1000 tpa industrial scale commercial demonstration line, also in Quebec.

The scale-up of production is being focused around Nano One’s most mature product, lithium-ion phosphate, to address the growing demand in the North American automotive and energy storage markets.

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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