FREYR (FREY) is going public via a SPAC merger with Alussa Energy Acquisition (ALUS). The transaction, which gives FREYR an implied pro forma equity value of $1.38 billion, is about to close, and the combined entity will be named FREYR Battery. What's FREY stock's forecast, and will it go up after the merger?
FREYR is a Norway-based battery cell manufacturer. After the transaction closes, ALUS public shareholders and sponsors will own 26 percent of FREYR, while PIPE (private investment in public equity) investors will own 44 percent.
The ALUS-FREYR merger date
The merger was approved by ALUS shareholders on Jun. 30. FREYR is expected to close its business combination with ALUS on Jul. 9. Its common stock and warrants will start trading on the NYSE under the ticker symbols “FREY” and “FREY.WS”, respectively.
FREYR’s new board
On Jun. 21, FREYR announced changes to its board of directors, which will be effective upon the ALUS-FREYR merger's closure. The board will comprise eight directors led by FREYR's founder and executive chairman, Torstein Dale Sjøtveit. The new board will help FREYR achieve its goal of manufacturing clean, efficient, low-carbon, and low-cost battery cells.
FREYR stock's forecast
No analysts cover FREYR stock, but given that it's a leading battery cell producer, analysts will likely start covering it soon.
Since ALUS’s current stock price is close to its listing price of $10, its pro forma EV (enterprise value) is $529 million. Based on this EV and FREYR’s projected sales, its valuation multiples come in at 48.1x (2022 sales), 1.6x (2023 sales), and 0.4x (2024 sales), respectively. Its multiples are lower than those of competitors QuantumScape (QS) and Microvast (THCB), which have 2024 EV-to-sales multiples of 658.8x and 2.3x, respectively.
FREYR stock is set to go up after the merger
The outlook for FREYR stock looks promising, and expectations for the company’s global addressable market continue to rise. In Jan. 2021, FREYR projected global battery demand reaching about 5,300 GWh (gigawatt hours) by 2030. In May, Bloomberg New Energy Finance forecast battery demand of 9,200 GWh by 2030.
FREYR is a good long-term investment
FREYR intends to develop battery cell factories in the gigawatt range. Its goal is to develop up to 43 GWh of battery cell production capacity in Norway by 2025, making the company one of the largest battery suppliers in Europe. Its first manufacturing capacity is expected to be operational in 2022.
FREYR expects to generate revenue of $11 million in 2022, $321 million in 2023, and $2.9 billion in 2025. The company forecasts its gross margins expanding to 31 percent by 2025 from 13 percent in 2022. FREYR expects to turn EBITDA-positive in 2023 and foresees EBITDA of $703 million in 2025.
As part of its merger with ALUS, FREYR will get about $290 million in cash held by ALUS in trust and $600 million in PIPE at $10 per share. PIPE investors include Koch Strategic Platforms, Glencore, Fidelity Management & Research, Franklin Templeton, Sylebra Capital, and Van Eck Associates. FREYR will use the money for growth.
What happens to ALUS SPAC stock after the merger?
Once the merger is complete, ALUS stock will automatically become FREYR stock and no longer exist in its SPAC avatar.
ALUS SPAC warrants are listed on the NYSE under the ticker symbol “ALUS.WS”. On Jul. 6, ALUS.WS was trading at $2.04. The exercise price of the ALUS warrant, like for other SPAC warrants, is $11.50.