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Arbe Robotics Ltd., a Global Leader in High-Resolution 4D Imaging Radar Technology, Expected to List on the Nasdaq Through a Merger with Industrial Tech Acquisitions, Inc.

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  • Arbe delivers the world’s first and only available long-range, 4D Imaging Radar, with industry leading performance and an unparalleled cost advantage
  • Arbe’s 4D Imaging Radar is suitable for every level of vehicle autonomy, and is a vital sensor for Level 2+ and higher, with significantly superior resolution to other competing radar solutions
  • Addresses the largest and fastest growing segments in automotive radar with a total addressable market of approximately $4 billion today, which is expected to increase to approximately $11 billion by 2025
  • Validated by relationships with more than 26 leading automotive original equipment manufacturers (“OEMs”), Tier 1s, and industrial conglomerates
  • Led by an experienced team of entrepreneurs, managers, auto and semiconductor executives, as well as radar and data scientists
  • Transaction values Arbe at a post-money pro forma enterprise value of approximately $572 million (assuming no redemptions by Industrial Tech public shareholders), implying a 1.8x multiple on 2025 forecasted revenue and a 4.4x multiple on 2025 forecasted pro forma Adjusted EBITDA, which is a non-GAAP financial measurement
  • The transaction is expected to provide up to approximately $177 million in gross cash proceeds, comprised of Industrial Tech’s approximately $77 million cash-in-trust (assuming no redemptions by Industrial Tech public shareholders), and a $100 million PIPE investment valued at $10.00 per share
  • PIPE offering anchored by top-tier institutional investors including M&G Investment Management, Varana Capital, Texas Ventures, and Eyal Waldman (founder and CEO of Mellanox Technologies)

HOUSTON and TEL AVIV, IsraelMarch 18, 2021 /PRNewswire/ — Arbe Robotics Ltd. (“Arbe” or the “Company”), a leading provider of next-generation 4D Imaging Radar solutions, and Industrial Tech Acquisitions, Inc. (NASDAQ: ITAC), a publicly-traded special purpose acquisition company (“ITAC” or “Industrial Tech”), today jointly announced that they have entered into (i) a definitive business combination agreement (the “Business Combination Agreement”) to consummate a business combination, and (ii) related subscription agreements for an aggregate of $100 million private placement in connection with the proposed business combination (the “PIPE”).  Subject to the satisfaction of the terms and conditions set forth in the Business Combination Agreement, upon closing of the transactions, the combined company will operate under the “Arbe Robotics Ltd.” name and is expected to be listed on Nasdaq under the new ticker symbol “ARBE”.

Arbe, founded in 2015, is leading a radar revolution, enabling safe driver-assist systems today while paving the way for fully autonomous driving. The company has introduced the world’s first ultra-high resolution 4D Imaging Radar that has 12x better resolution than other competing radars currently in the market. Arbe’s 4D Imaging Radar separates, tracks, and identifies objects in 2K resolution in both azimuth and elevation, which can alert autopilot, emergency braking or steering features at the right moment. Bridging the automotive sensor gap that caused the recent advanced driver assist systems accidents, Arbe’s technology provides true safety to drivers as well as vulnerable road users like pedestrians and cyclists.

Arbe’s proprietary chipset has the largest channel array count in the industry with 48 receiving and 48 transmitting RF channels, a dedicated processor chip, and AI-based post-processing. The production-ready and affordable 4D Imaging Radar chipset solution, executes in the most challenging corner cases and is dependable in practically all environmental conditions.

Many leading Tier 1 manufacturers and OEMs are currently designing their next generation radars based on Arbe’s groundbreaking technology, which is also empowering advanced sensing for an array of additional applications including robotaxis, autonomous ground vehicles (AGV) / delivery pods, commercial and industrial vehicles, and more.

Kobi Marenko, Chief Executive Officer of Arbe, said, “We expect that the proposed combination of Arbe and Industrial Tech will allow us to bring our vision to reality, creating an autonomous future driven by outstanding, truly safe, commercially viable 4D Imaging technology. We are extremely excited by the opportunity to partner with ITAC, and we expect that ITAC’s significant experience in building and investing in disruptive technology companies will help bring our groundbreaking technology to a broader market.”

Scott Crist, Chairman and CEO of Industrial Tech commented, “Arbe is the market leader with a first mover advantage in ultra-high resolution 4D Imaging Radar technology. The Company is at an exciting inflection point, with a technology platform that is an order of magnitude superior in terms of performance and efficiency. We expect that Arbe’s projected high-growth and high-margin fabless business model, with outsourced manufacturing, will provide a high level of scalability, positioning the company for commercial success in the automotive, industrial, and new mobility markets. We are very excited about the opportunity to partner with the company’s leadership team, who have a demonstrated track record as public company executives, and who have built a technology business poised for market leadership and scale.”

Additional information about Arbe Robotics operations and financial performance, as well as the transactions contemplated by the Business Combination Agreement, is contained in the investor presentation that will be furnished by Industrial Tech via a Current Report on Form 8-K (the “Investor Presentation”) today with the Securities and Exchange Commission (“SEC”), and which can be viewed at the SEC website at www.sec.gov.

Transaction Overview

The combined company is expected to have an implied post-money pro forma enterprise value of approximately $572 million and an equity value of approximately $722 million at closing, assuming no redemptions by ITAC public shareholders.  Assuming no redemptions by ITAC public shareholders, the transaction is expected to deliver up to approximately $177 million of gross proceeds, including the contribution of up to approximately $77 million of cash held in Industrial Tech’s trust account.

The transaction is further supported by a $100 million fully-committed PIPE anchored by leading investors including M&G Investment Management, Varana Capital, Texas Ventures, Eyal Waldman, and certain other investors, which upon consummation of the PIPE satisfies the $100 million minimum cash closing condition contained in the Business Combination Agreement.

In the transaction, a newly formed subsidiary of Arbe will merge with ITAC, with ITAC surviving as a wholly-owned subsidiary of Arbe. In connection therewith, all pre-closing security holders of ITAC will receive ordinary shares of Arbe, which will continue after the closing as a publicly-traded Israeli company. All current Arbe shareholders will, concurrently with closing, convert the entirety of their pre-closing equity holdings into ordinary shares of the combined company.  The transaction, which has been unanimously approved by the board of directors of both Arbe and Industrial Tech, is expected to close in the late 2nd quarter or early 3rd quarter of 2021, subject to shareholder approvals, and other customary closing conditions.

Following the completion of the acquisition, Arbe is expected to retain its experienced management team, with Kobi Marenko as CEO, Noam Arkind as CTO, Ram Machness as Chief Business Officer and Danny Klein as CFO.

The investor presentation webcast link: https://edge.media-server.com/mmc/p/5cux5jqt

The description of the transaction contained herein is only a summary and is qualified in its entirety by reference to the Business Combination Agreement, a copy of which will be filed by ITAC with the SEC as an exhibit to a Current Report on Form 8-K.

Advisors

Wells Fargo Securities is serving as exclusive financial advisor to Arbe, and is serving as lead placement agent to Industrial Tech on the PIPE offering.  Epsilon and Poalim Capital Markets are also serving as placement agents on the PIPE offering.

DLA Piper LLP (US) is serving as legal advisor to Arbe, and Ellenoff Grossman & Schole LLP is serving as legal advisor to Industrial Tech.

About Industrial Tech Acquisitions, Inc (“ITAC“)

ITAC is a blank check company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. ITAC is sponsored by Texas Ventures, a leading technology and venture capital firm with expertise in capital markets and structured finance.  The firm provides guidance, insight and capital to assist entrepreneurs and managers who have the desire and talent to build exceptional companies.  The Texas Ventures’ approach is to identify emerging trends and opportunities prior to recognition by the broader marketplace, and to take a proactive approach in working with entrepreneurs and managers who have the determination to build world-class companies.

About Arbe Robotics Ltd (“Arbe”)

Arbe, a provider of 4D Imaging Radar solutions, is leading a radar revolution, enabling truly safe driver-assist systems today while paving the way for fully autonomous driving. Arbe is empowering automakers, tier-1 companies, and enabling autonomous ground vehicles, commercial and industrial vehicles, and a wide array of safety applications with next-generation sensing and paradigm-changing perception. Arbe’s Imaging Radar offers an order of magnitude higher resolution than any other competing radar solution in the market, and is an essential sensor for L2+ and higher levels of autonomy. Arbe’s solution includes an RF chipset with the largest channel array in the industry, a groundbreaking radar processor chip, and AI-based post-processing. Founded in 2015, Arbe has offices in Israel and the United States.

Important Notice Regarding Forward-Looking Statements and Non-GAAP Measures

This press release contains certain “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about ITAC and Arbe and the transactions contemplated by the Business Combination Agreement (the “Transactions”), and the parties’ perspectives and expectations, are forward looking statements. Such statements include, but are not limited to, statements regarding the Transactions, including the anticipated initial enterprise value and post-closing equity value, the benefits of the Transactions, integration plans, expected synergies and revenue opportunities, anticipated future financial and operating performance and results, including estimates for growth, the expected management and governance of the combined company, and the expected timing of the Transactions. The words “expect,” “believe,” “estimate,” “intend,” “plan”, “anticipate”, “project”, “may”, “should”, “potential” and similar expressions indicate forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to various risks and uncertainties, assumptions (including assumptions about general economic, market, industry and operational factors), known or unknown, which could cause the actual results to vary materially from those indicated or anticipated.

Such risks and uncertainties include, but are not limited to, risks related to: (i) the expected timing and likelihood of completion of the Transactions, including the risk that the Transactions may not close due to one or more closing conditions to the Transactions in the Business Combination Agreement not being satisfied or waived on a timely basis or otherwise, or that the required approval of the Business Combination Agreement and related matters by the shareholders of Arbe and ITAC are not obtained; (ii) a default by one or more of the investors in the PIPE on its commitment, and ITAC’s failure to retain sufficient cash in its trust account or find replacement financing in order to meet the $100 million minimum cash condition in the Business Combination Agreement; (iii) the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement; (iv) the ability of the Company to meet Nasdaq listing standards following the Transactions and in connection with the consummation thereof; (v) costs related to the proposed Transactions; (vi) the occurrence of a material adverse change with respect to the financial position, performance, operations or prospects of  Arbe or ITAC; (vi) the disruption of Arbe management time from ongoing business operations due to the proposed Transactions; (vii) announcements relating to the Transactions having an adverse effect on the market price of ITAC’s securities; (viii) the effect of the Transactions and the announcement thereof on the ability of Arbe to retain customers and retain and hire key personnel and maintain relationships with its suppliers and customers and on its operating results and businesses generally; (ix) the failure of Arbe to meet projected development and production targets; (x) changes in applicable laws or regulations, including laws and regulations affecting the market for Arbe’s products; (xi) the possibility that the combined company may be adversely affected by other economic, business, and/or competitive factors, or the continuing effects of the COVID-19 pandemic, the worsening thereof or other future pandemics; and (xii) other risks and uncertainties, including those to be identified in the proxy statement/prospectus (when available) relating to the Transactions, including those under “Risk Factors,” “Cautionary Notes Concerning Forward-Looking Statements” and “Arbe Management’s and Analysis of Financial Conditions and Results of Operations” therein, and in other filings with the Securities and Exchange Commission (“SEC”) by ITAC or Arbe.  ITAC and Arbe caution that the foregoing list of factors is not exclusive.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements relate only to the date they were made, and ITAC and Arbe undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made except as required by law or applicable regulation.

Non-GAAP Financial Measures

This press release includes certain financial measures not presented in accordance with U.S. generally accepted accounting principles (“GAAP”) including, but not limited to, Adjusted EBITDA.  Adjusted EBITDA is not calculated in accordance with GAAP.  It is a performance measure that provides supplemental information that ITAC and Arbe believe is useful to analysts and investors to evaluate ongoing results of operations, when considered alongside GAAP measures such as net income, operating income and gross profit. Adjusted EBITDA excludes the financial impact of items management does not consider in assessing the ongoing operating performance of ITAC, Arbe or the combined company, and thereby facilitates review by Arbe’s management of its operating performance on a period-to-period basis. Other companies may have different capital structures or different lease terms, and comparability to the results of operations of ITAC, Arbe or the combined company may be impacted by the effects of acquisition accounting on its depreciation and amortization. As a result of the effects of these factors and factors specific to other companies, ITAC and Arbe believe Adjusted EBITDA provides helpful information to analysts and investors to facilitate a comparison of their operating performance to that of other companies.  However, the use of Adjusted EBITDA or other non-GAAP financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing Arbe’s or the combined company’s financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP. Arbe’s presentation of these measures may not be comparable to similarly-titled measures used by other companies.  These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures.  Further, this press release does not include any financial statements prepared in accordance with GAAP or financial information derived from financial statements prepared in accordance with GAAP, with result that this press release does not show how the non-GAAP information relates to financial statements prepared in accordance with GAAP and does not show the adjustments from financial statements prepared in accordance with GAAP.  Projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not, and are likely not to, reflect actual results. Accordingly, undue reliance should not be given to non-GAAP financial information.

No Offer or Solicitation

This press release is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities pursuant to the proposed transactions or otherwise, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

No Assurances

There can be no assurance that the proposed Transactions will be completed, nor can there be any assurance, if the Transactions are completed, that the potential benefits of combining the companies will be realized. The description of the Transactions contained herein is only a summary and is qualified in its entirety by reference to the definitive agreements relating to the Transactions, copies of which will be filed by ITAC with the SEC as an exhibit to a Current Report on Form 8-K.

Additional Information and Where to Find It

In connection with the Transactions described herein, ITAC and Arbe will file relevant materials with the SEC, including Arbe’s registration statement on Form F-4 that will include a proxy statement of ITAC that constitutes a prospectus for Arbe and a definitive proxy statement for ITAC’s shareholders.  Promptly after filing its definitive proxy statement with the SEC, ITAC will mail the definitive proxy statement and a proxy card to each stockholder entitled to vote at the special meeting relating to the Transactions. INVESTORS AND SECURITY HOLDERS OF ITAC AND ARBE ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTIONS THAT ITAC OR ARBE WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ITAC, ARBE AND THE TRANSACTIONS.  The definitive proxy statement, the preliminary proxy statement and other relevant materials in connection with the transaction (when they become available), and any other documents filed by ITAC with the SEC, may be obtained free of charge at the SEC’s website (www.sec.gov) or by writing to ITAC at: 5090 Richmond Ave., Suite 319; Houston TX, 77056.

Participants in Solicitation

The Company, ITAC, and their respective directors, executive officers and employees and other persons may be deemed to be participants in the solicitation of proxies from the holders of ITAC common stock in respect of the proposed Transactions. Information about ITAC’s directors and executive officers and their ownership of ITAC’s common stock is set forth in ITAC’s filings with the SEC.  Additional information regarding the interests of the participants in the proxy solicitation will be included in the proxy statement pertaining to the proposed Transactions when it becomes available.  These documents can be obtained free of charge from the sources indicated above.

Media Contacts:

DeeDee Rudenstein, Propel Strategic Communications
267-521-9654
drudenstein@propelsc.com

Industrial Tech Acquisitions, Inc.
713-599-1300
Scott Crist or
Lisa@texasventures.com

Arbe Robotics, LTD

+972-54-5422432
Shlomit Hacohen
shlomit.h@arberobotics.com

SOURCE Arbe Robotics Ltd.

Source: PR Newswire – Arbe Robotics Ltd., a Global Leader in High-Resolution 4D Imaging Radar Technology, Expected to List on the Nasdaq Through a Merger with Industrial Tech Acquisitions, Inc.

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SPACS

Wall Street’s $100 Billion SPAC Boom Upends the League Tables

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  • Niche players like Cantor Fitzgerald soar in league tables
  • Citi jumps to No. 1 in IPO rankings as UBS drops out of top 10

The blank-check listings craze is shifting fortunes on Wall Street, knocking some of the world’s biggest banks off their perches and bringing unexpected bragging rights for others unaccustomed to competing for league table glory.

Cantor Fitzgerald LP, long one of the top SPAC underwriters, has been the biggest beneficiary of the boom and ended the first quarter as the No. 10 adviser on initial public offerings globally. The boutique, which hasn’t ranked that high for any full year in the past decade, got 99% of this year’s deal credit from blank-check work, data compiled by Bloomberg show. Without those deals, it would be 155 places lower.

Special purpose acquisition companies raised $100 billion in the opening three months, equivalent to more than two-thirds of the haul from all U.S. listings. That meant league table spots were heavily affected by a bank’s expertise in a once-niche part of the market that’s suddenly ballooned in popularity.

Citigroup Inc. jumped six spots in the rankings to become the busiest IPO arranger globally in the first quarter, thanks in part to its status as the No. 1 SPAC underwriter. Rival Bank of America Corp. rose nine places from this time last year to No. 6.

On the flip side, Switzerland’s UBS Group AG and four Asian investment banks — China International Capital Corp.Citic Securities Co.China Securities Co. and Sinolink Securities Co. — all dropped out of the top 10.

Global IPO Rankings

League tables shaken up by wave of blank-check listings

Source: Bloomberg
“Ranking Boost” compares current positions on IPO league table to ranking if blank-check companies weren’t counted. Last column measures percentage of deal credit coming from SPACs.

There was a chance to boast for firms further down the tables too. Though they still ended a way off the top, both Oppenheimer Holdings Inc. and BTIG LLC — niche players in the world of equity capital markets — saw their IPO rankings boosted by more than 100 spots thanks to roles on SPAC listings this year, the Bloomberg data show.

To be sure, investment banks that are too dependent on SPAC listings could be caught flat-footed when volumes dry up, and signs are already emerging that these deals won’t maintain their breakneck pace.

Turning Tide

Volume of new SPAC filings declines from record highs

Source: Bloomberg
Data for most recent week is through mid-day April 1.

Last week, blank-check companies filed plans to raise a combined $8.4 billion through U.S. IPOs, down 36% from the previous week. Their combined fundraising target, as well as the number of deals, both represented the lowest weekly tally since the end of January.

On Wednesday, for the first time in a long while, there weren’t any new SPACs that lodged registration documents. The brief drought marked a big change from recent months, when particularly prolific dealmakers were filing for three IPOs in a single day.

For now at least, some banks have something new to shout about with rivals and clients.

Source: Bloomberg – Wall Street’s $100 Billion SPAC Boom Upends the League Tables

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Equinox Group Draws SPAC Interest After $350 Million 2020 Loss

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  • Company fielding SPAC interest at at least $7 billion value
  • Earnings turned negative after gyms shut down during pandemic

Equinox Group is fielding interest from blank-check firms that would take the company public after it lost around $350 million last year amid the pandemic, according to people with knowledge of the matter.

Despite the loss, the gym chain has started to solicit interest from suitors including special purpose acquisition companies that value Equinox, including its SoulCycle entity and other brands, at $7 billion or more, said the people, who asked not to be named discussing private results.

Equinox Group’s consolidated revenue was around $650 million last year, the people said. Cash at gym unit Equinox Holdings was $50 million after the company paid down part of a revolving credit line, one of the people added.

Members were able to freeze or cancel their accounts when the spread of Covid-19 first shut gyms last year, pressuring the company’s financial results and forcing it to furlough thousands of workers.

A representative from Equinox didn’t respond to requests for comment. Sportico previously reported that the chain had received interest from SPACs and private equity firms.

The entire fitness industry is reeling from forced closures tied to the pandemic. Chains including Gold’s Gym International Inc., 24 Hour Fitness Worldwide Inc. and the owner of New York Sports Clubs sought bankruptcy protection last year.

Gyms have been allowed to reopen in many cities, though social distancing, cleaning guidelines and capacity limitations remain in place. Indoor fitness classes like SoulCycle recently started up again in New York, and the spin chain has also been offering outdoor classes in select locations. Equinox bought a majority stake in SoulCycle in 2011.

The company last year secured funding from private equity firm Silver Lake to build a digital platform, now known as Equinox+, and add as many as 50 locations annually.

Closely held Equinox received a minority investment in 2017 from L Catterton, a consumer-focused private equity firm, and is backed by principals of billionaire Stephen Ross’s Related Cos. Price quotes on the fitness company’s $1.02 billion loan due 2024 have hovered around 93 cents on the dollar.

Source: BloombergEquinox Group Draws SPAC Interest After $350 Million 2020 Loss

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Interest in SPACs—Special Purpose Acquisition Companies—is booming…and so is the risk of litigation.

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Following these ten steps will prepare SPAC boards, sponsors, and advisors for the likely shareholder suits and potential regulatory investigations that are increasingly becoming part of the SPAC landscape.

If 2020 was the “year of the SPAC,” 2021 may be the year of SPAC litigation. SPACs—Special Purpose Acquisition Companies—are publicly traded companies launched as vehicles to raise capital to acquire a target company. Often called blank-check companies, SPACs are companies in which shareholders buy shares without knowing which company the SPAC will target and acquire. Investors place their faith in the sponsor: the entity or management team that forms the SPAC. The SPAC generally has around twenty-four months to seek out and acquire a target, or else must liquidate and return the capital.

Hundreds of new SPACs were launched in 2020 alone. Booming M&A or other transactional activity in any sector can invite litigation driven by plaintiffs’ attorneys, and SPACs are no exception. In just the first three months of 2021, more than 40 suits targeting SPACs have been filed. The nature of these claims evidence growing sophistication, as lawyers used to challenging traditional M&A transactions begin to tailor their claims to the unique characteristics of the SPAC lifecycle. And with SPACs going mainstream—and attracting attention from outside the usual financial circles—regulators are closely examining transaction disclosures and other aspects of SPAC deals.

Preparing in advance—throughout the SPAC transaction cycle—for the prospect of litigation or regulatory scrutiny could make the difference between a quick resolution and an existential threat. Following these ten steps will provide SPACs, their boards, their sponsors, and their advisors the edge in future litigation or regulatory inquiries.

1. Document all board meetings in formal minutes—and make sure they are approved.

The typical public company has a corporate secretary who takes minutes at each board and committee meeting. The typical SPAC has no such employee and corporate housekeeping is sometimes delayed in the urgency to secure a binding acquisition transaction. Nevertheless, formal minutes, formally approved, are important and this detail should not be ignored or delayed unreasonably. Accurate, complete, contemporaneous, and board-approved minutes are important in demonstrating the board’s compliance with its fiduciary duty of due care. The absence of board minutes unfortunately can demonstrate the reverse.

2. Carve out time at each board meeting for private, executive sessions of independent directors—without the sponsor—and document in the minutes that these sessions occurred.

There have been persistent concerns about conflicts between SPAC sponsors and public investors. Plaintiffs’ attorneys are targeting these potential conflicts—arguing that sponsors have wielded their influence to push through deals on terms that favor their own interest in consummating a transaction within the required timeframe at the expense of other shareholders. To guard against the appearance that a SPAC board was captive to the sponsor, boards should reserve time for private deliberation by independent directors, free of the sponsor’s watchful eye, and board members should carefully evaluate the performance by sponsors.

3. Provide SPAC boards detailed due diligence reports before deal approval.

Rare is the SPAC litigation that does not claim the SPAC hastily agreed to a deal without adequate diligence. There are multiple ways to mitigate these claims—adopting exculpatory charter provisions can help—but there is no substitute for a well-informed board. Even if fulsome diligence, financial analyses or other assessments were performed, that information must be communicated to the board with adequate time for board review to put directors in the best position to argue that the transaction is the product of informed deliberation and that the board was afforded adequate time to review and sign off on the accuracy of the deal disclosures.

4. Make a record of looking for initial business combination opportunities.

The objectives of a SPAC are to identify a partner for an initial business combination and to complete that transaction. The sponsor should aggressively seek out these opportunities. The sponsor should also periodically inform the board of its efforts in this regard, and that should be reflected in the minutes. If an initial business combination is completed and the board is sued, it will be helpful if the minutes reflect efforts to identify a partner. The absence of that record could make it appear that what was being sought was any business combination, but not necessarily the best one.

5. The audit committee should scrutinize the target’s financials.

For the target company, the requisite disclosures that must be made to complete the de-SPAC transaction are more akin to an IPO than a typical acquisition by an existing, public operating company. Extensive, detailed audited financials are required, and the review of these disclosures by the SPAC board should be performed in consultation with competent advisors and/or delegated to the experts on the audit committee.

6. Consider obtaining a fairness opinion—and/or a formal presentation from the financial advisor.

Fairness opinions tend to be the province of target companies, not buyers. But the SPAC’s very existence centers around this acquisition, and a fairness opinion, like proper deal diligence, can bolster the board’s decision-making process—particularly if the target company has connections to the SPAC or the sponsor. Obtaining the opinion is not a mere box to check on the closing checklist.  Regardless of whether a fairness opinion is obtained, the board should consider whether a financial advisor presentation is desirable.

7. The merger proxy statement should be carefully prepared.

The merger proxy statement for the initial business combination should be as scrupulously prepared as an IPO prospectus. So, for example, if the target company relies heavily on one customer or supplier, or if major competition is expected to be faced, or if its products are relatively untested, it is not enough to mention that in boilerplate “risk factors.” And if potential business issues have been identified by consultants or in due diligence, those should be fully disclosed. Finally, it is often the case that forecasts will be included in the proxy statement for the business combination. Are those the only forecasts the SPAC has seen? If not, you should consider what you should do about the other set of forecasts.

8. All public statements should be closely scrutinized for accuracy—including social media posts.

Rule 10b-5 does not contain a social media exception. High-profile leaders of public companies are finding themselves on the receiving end of securities fraud claims and enforcement actions for statements made on Twitter and other platforms. SPAC boards should have policies in place to guard against these missteps, which should include a process to review, identify and correct potentially misleading claims or risky puffery.

9. Beware the late-stage deal.

The appearance of potential conflicts between SPAC sponsors and ordinary shareholders approaches its zenith as the deadline for liquidation looms. SPAC leadership should be aware that multiple suits have been filed against SPACs that embraced a deal target at the eleventh hour, claiming that the SPAC sponsors and boards put their interest in closing a deal ahead of the SPAC and its investors.

10. Disclose, disclose, disclose.

Plaintiffs’ lawyers use the SEC’s guidance on disclosure considerations for SPACs like a playbook. SPAC boards should carefully review disclosures that touch on the topics flagged by the SEC, particularly disclosures relating to conflicts (such as interlocks between the sponsor, the SPAC, and the target; the liquidation timeline; and underwriting fee structures) and details about how the SPAC board settled on the acquisition target.

Source: JDSupra/Cadwalader, Wickersham & Taft – Interest in SPACs—Special Purpose Acquisition Companies—is booming…and so is the risk of litigation.

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The ‘March SPACness’ Final Four Is Set: Are These The Best Former SPACs

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On “SPACs Attack,” the latest SPAC mergers, rumors and headline news is broken down Monday through Friday.

To coincide with the 2021 March Madness Tournament, “SPACs Attack” held a March SPACness Tournament featuring a bracket of 64 companies that have completed the SPAC process and are now publicly traded companies.

The winner of each round was decided by the live audience on YouTube based on which company would have the highest percentage increase from March 16, 2021, through the end of the year.

A Final Four has been set and features the following former SPACs.

Romeo Power: Battery maker Romeo Power Inc RMO 0.6% emerged into the Final Four with a narrow victory over online sports betting and iGaming operator Rush Street Interactive RSI 0.3%.

Romeo Power shares traded for over $40 back in December and have fallen since completing the merger.

The company reported earnings on Tuesday with fiscal 2020 revenue of $9 million, which was lower than the $11 million listed in the company’s investor presentation.

Guidance from the company of $18 million to $40 million for fiscal 2021 was significantly lower than the $140 million projected by the company at the time of the SPAC deal announcement. Supply chain issues were listed as an explanation for the lowered guidance.

Desktop Metal: 3D printing stock Desktop Metal Inc DM 3.16% grabbed a spot in the Final Four with a win over online home buying and selling company Opendoor Technologies Inc OPEN 2.64%.

Desktop Metal is a large player in additive manufacturing seeking to power the next industrial revolution printing items for large customers. The company also recently expanded through acquisitions and the launch of a healthcare division.

DraftKings: Online sports betting and iGaming company DraftKings Inc DKNG 2.53% landed a spot in the Final Four with a victory over rare earth mining company MP Materials Corp MP 2.15%.

DraftKings has a presence in more states than any other competitor in the online sports betting space. The company continues to be viewed as a leader in the space and analysts have raised projections for revenue, market share and the iGaming opportunity for the company.

Butterfly Network: Rounding out the Final Four is Butterfly Network Inc BFLY 3.21%, a portable ultrasound company backed by Bill Gates. The company beat out Skillz SKLZ 1.26% in a close Elite Eight battle.

Butterfly Networks has been a favorite of Cathie Woods with the Ark Genomic Revolution ETF (BATS: ARKG) taking a position shortly after the deal was announced.

The company is seen as a long-term winner in the emerging health market with a device that could help hospitals with costs and expand ultrasound availability in emerging markets.

What’s Next: Romeo Power will battle Desktop Metal for a spot in the championship, while DraftKings battles Butterfly Network.

To see who wins and makes it to the championship, tune into “SPACs Attack” next week and vote for your favorite in the chat.

Source: Benzinga – The ‘March SPACness’ Final Four Is Set: Are These The Best Former SPACs?

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Source: https://spacfeed.com/the-march-spacness-final-four-is-set-are-these-the-best-former-spacs?utm_source=rss&utm_medium=rss&utm_campaign=the-march-spacness-final-four-is-set-are-these-the-best-former-spacs

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