NEW YORK - American Resources (NASDAQ:AREC) Corporation’s subsidiary, American Metals LLC, and AI Transportation Acquisition Corp, a special purpose acquisition company, announced today a definitive business combination agreement. The transaction is valued at $170 million and will result in the creation of a new entity, Electrified Materials Corporation, to be listed on Nasdaq under the ticker symbol EMCO.
The merger aims to bolster American Metals' position in the market for recycled metals critical to the electrified economy. American Metals, known for recycling metals from former thermal coal mines, plans to expand its preprocessing of end-of-life magnets, lithium-ion batteries, and ferrous metals. This is part of a strategy to ensure a domestic supply chain for copper, aluminum, steel, and rare earth and battery elements.
American Metals leverages regional logistics and its affiliation with ReElement Technologies Corporation, a refining technology platform, to process used metals and minerals. The company is poised to grow in the used steel, rare-earth elements, and battery materials market, addressing the undersupply that threatens the energy transition.
According to the World Economic Forum's April 24, 2024 report, the recycling rate for many critical metals is below 5%, with battery metals even lower. American Metals is positioned to lead in the production of these critical metals while also contributing to global greenhouse gas reduction through its closed-loop supply chain.
Mark Jensen, Chairman and CEO of American Resources Corporation, highlighted the merger as an opportunity for American Metals to capitalize on the recycling market and technological advancements to improve margins. Yongjin Chen, Chairman and CEO of AITR, expressed confidence in American Metals' management and business model.
The completion of the business combination is subject to regulatory approvals, approval by the shareholders of both AITR and American Metals, and other customary closing conditions.
American Resources Corporation is a supplier of raw materials for the infrastructure market, focusing on metallurgical carbon, critical and rare earth minerals, and recycled metal. American Metals LLC, a subsidiary of American Resources, is a recycler of metals for the electrified economy. AI Transportation Acquisition Corp. is a blank check company targeting businesses for mergers or similar combinations.
This merger is based on a press release statement and is subject to customary closing conditions and regulatory approvals.
InvestingPro Insights
As American Metals LLC embarks on its strategic merger to form Electrified Materials Corporation, financial metrics and professional insights provide a deeper understanding of the market landscape. InvestingPro data indicates that American Metals' affiliate, AI Transportation Acquisition Corp (AITR), holds a market capitalization of $81.15 million, reflecting its size and market presence.
From a performance standpoint, AITR has demonstrated a notable stability in its stock price, typically exhibiting low volatility. This could signal a level of investor confidence in the company’s business model and future prospects. However, the InvestingPro Tips suggest that AITR has been grappling with weak gross profit margins, which could be an area of focus for the newly formed entity to address, especially considering the competitive nature of the recycled metals market.
Despite the challenges, AITR's liquid assets currently exceed its short-term obligations, providing the company with a solid financial foundation to navigate post-merger integration and expansion plans. Additionally, AITR is trading near its 52-week high, indicating that the market may be responding positively to its strategic moves, including the upcoming merger.
For potential investors and stakeholders looking to delve deeper into AITR's financial health and strategic positioning, there are additional InvestingPro Tips available. These insights could prove invaluable for making informed decisions in the context of the merger and the broader electrified economy. Interested readers can take advantage of a special offer using the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these additional tips.
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