Novonix streamlines focus with BTS business sale
Novonix Limited (ASX: NVX) has entered a binding term sheet for the Novonix BTS Business Divestiture, selling its Battery Technology Solutions division to former CEO Dr. Chris Burns for US$1.00. The transaction represents a strategic sharpening of portfolio focus rather than a value extraction exercise, with the company retaining a 15% non-dilutable equity stake in the cathode business and US$2M in cash at close.
This follows the September 2025 sale of the Mt. Dromedary natural graphite project, establishing a clear pattern of portfolio rationalisation. The company is exiting non-core segments to concentrate management attention and capital on building a North American synthetic graphite supply chain, with transition services provided through at least 30 September 2026.
Management is demonstrating capital discipline by divesting diversified battery technology services to focus resources exclusively on synthetic graphite production, the company’s primary growth thesis.
What is synthetic graphite and why does it matter?
Synthetic graphite is a manufactured form of carbon produced through high-temperature processing of petroleum or coal-based materials. It serves as a critical anode material in lithium-ion batteries, the rechargeable power sources used in electric vehicles and grid-scale energy storage systems.
Unlike natural graphite mined from deposits, synthetic graphite offers greater purity and consistency, making it particularly valuable for high-performance battery applications. The material’s quality directly influences battery capacity, charging speed, and cycle life.
Establishing North American production capacity for synthetic graphite reduces dependence on foreign supply chains, particularly given current geopolitical tensions affecting critical mineral sourcing. Novonix’s stated goal of building a vertically integrated synthetic graphite supply chain positions the company to serve domestic battery manufacturers seeking localised sourcing options.
Understanding this end market clarifies why the company is prioritising synthetic graphite operations over diversified battery technology services. The battery materials segment offers direct exposure to electric vehicle adoption trends, whilst BTS serves a more specialised testing and research market.
The BTS business explained
BTS was founded in 2013 by Dr. Chris Burns in collaboration with researchers from Dalhousie University and acquired by Novonix in 2017. The division provides advanced battery testing systems, specialised R&D services, and proprietary cathode synthesis technology serving defence, grid stability, and high-performance energy storage customers.
The sale returns the business to its founder rather than transferring operations to an unknown third party, potentially easing transition risks for existing BTS customers and employees.
Core BTS offerings include:
- Ultra-High Precision Coulometry (UHPC) testing systems for detailed battery performance analysis
- Specialised battery R&D services supporting product development programmes
- Proprietary all-dry, zero-waste cathode synthesis technology using patented manufacturing processes
The division’s customer base spans government defence applications and utility-scale energy storage projects, representing a distinct market from Novonix’s synthetic graphite production focus.
Deal structure and what Novonix retains
The binding term sheet outlines a share equity sale of the BTS business including all associated liabilities and assets. Whilst the US$1.00 transaction price appears nominal, the deal structure preserves Novonix’s exposure to potential cathode technology upside through its retained equity position.
The 15% non-dilutable equity stake in the cathode business means the company maintains participation in that technology’s commercial development without ongoing operational burden or capital allocation requirements. Cash at close is set at US$2M, subject to customary adjustments, with Novonix providing transition services and granting a trademark licence through at least 30 September 2026.
| Term | Detail |
|---|---|
| Transaction type | Share equity sale |
| Price | US$1.00 |
| Equity retention | 15% non-dilutable stake in cathode business |
| Cash at close | US$2M (subject to adjustments) |
| Transition services | Through 30 September 2026 |
The transaction remains subject to negotiation and execution of definitive agreements and satisfaction of customary conditions precedent. The parties expect to finalise agreements and complete the transaction in the coming months, though no specific closing date has been confirmed.
The retained equity stake means Novonix hasn’t fully exited cathode technology exposure, creating potential hidden optionality if the cathode business scales successfully under Dr. Burns’s leadership. This structure allows the company to benefit from future cathode technology commercialisation without diverting capital or management focus from synthetic graphite operations.
CEO commentary on strategic direction
Management has framed the Novonix BTS Business Divestiture as the continuation of a deliberate portfolio simplification strategy, following the completed sale of the Mt. Dromedary natural graphite mining project in September 2025.
Mike O’Kronley, CEO of Novonix
“The divestiture of the BTS division, following the completed sale of the Mt. Dromedary natural graphite mining project in September 2025, reflects NOVONIX’s disciplined strategy to prioritize synthetic graphite. We are focused on directing our management attention and capital to building the North American supply chain for this critical mineral.”
The statement reinforces management’s disciplined approach to capital allocation, explicitly prioritising synthetic graphite over diversified battery technology services and natural graphite mining operations.
Investment implications and next steps
The transaction creates a leaner operational structure with a clearer strategic narrative concentrated on synthetic graphite supply chain development. Investors now face a simplified investment thesis focused exclusively on North American battery materials production rather than diversified battery technology services.
The company’s headquarters and anode materials operations remain in Chattanooga, Tennessee, anchoring its North American platform for critical battery materials. This geographic concentration supports the company’s positioning as a domestic supplier to battery manufacturers seeking to reduce foreign supply chain dependencies.
The transaction requires finalisation of definitive agreements and remains subject to customary closing conditions, meaning completion is not yet certain. Timing is expected within the coming months, though no specific deadline has been disclosed.
Portfolio rationalisation eliminates management distraction from lower-priority segments, but also concentrates execution risk in a single business line. Success now depends entirely on the company’s ability to scale synthetic graphite production capacity and secure long-term customer commitments in a competitive battery materials market.
Key investor takeaways:
- Portfolio rationalisation continues after September 2025 Mt. Dromedary sale, demonstrating consistent strategic direction
- Management focus now exclusively on synthetic graphite supply chain development in North America
- 15% cathode equity stake provides residual exposure to divested technology without ongoing capital requirements
- Transaction completion expected in coming months pending definitive agreements and satisfaction of closing conditions
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