Mustang Energy PLC on Friday said it had struck a deal to acquire Cykel AI for £19.2 million.

Mustang, a London-based special purpose acquisition company focused on energy storage and stationary battery assets, entered into a non-binding heads of terms for the entire share capital of artificial technologies firm Cykel.

Mustang will acquire Cykel on the basis of 1.844 new Mustang shares for each Cykel share. The ratio, calculated on the basis of £1.0 million of Mustang, values Cykel at £19.2 million based on its ten-day average in November.

A draft prospectus for the acquisition, which constitutes a reverse takeover, has been filed with the UK financial conduct authority, and the companies expect to publish the prospectus during the second quarter of 2024.

The scheme is also conditional upon approval from both Cykel and Mustang shareholders, as well a high court sanction and relevant regulatory approvals.

However, Mustang said that the heads of terms deal does not guarantee that an offer will be made for Cykel, even if the above preconditions are satisfied. The company said that a further announcement will be made ‘in due course’.

Shares in Mustang have been suspended at 30.60 pence each since 2021.

Cykel AI shares were suspended at 9.18 pence each on Thursday ahead of Friday’s announcement.

Separately on Friday, Mustang said pretax loss widened to £1.5 million from £776,832 a year ago, driven by £292,756 in administrative expenses. Operating loss for the half-year narrowed, however, to £292,756 from £357,679 the year prior.

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