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Exclusive Forbes pursues SPAC talks amid new takeover interest – sources

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Business news and information publisher Forbes Media LLC is in talks to go public through a merger with a special purpose acquisition company (SPAC) as it attracts new acquisition interest, people familiar with the matter said on Thursday.

Forbes’ owner is also fielding offers from bidders including investment vehicle Borderless Services Inc, which has bid $700 million, and from a consortium led by tech investor Michael Moe, the sources said. Both of these bids would result in Forbes remaining a privately held company.

A deal could result in Forbes’ ownership changing hands seven years after Hong Kong-based investor group Integrated Whale Media Investments purchased 95% of the company. The remainder of Forbes is owned by the Forbes family.

A proposed deal with a SPAC would take Forbes public on the U.S. stock market, enabling the existing owners to benefit from any share price increase on their remaining stakes.

The identity of the SPACs in talks with Forbes was not immediately clear.

A Forbes spokesman said: “We have no comment, but investors have consistently shown interest in Forbes, which has produced three years of record results. 2021 is shaping up to be a strong year as well.”

Integrated Whale Media could not immediately be reached for comment. Moe and Borderless Services declined to comment.

Moe is founder and CEO of GSV Ventures. Borderless Services is an investment vehicle specializing in blockchain technology and is led by entrepreneur Patrick McConlogue.

The Borderless Services bid has a debt financing commitment from private equity firm Ares Management Corp (ARES.N), the sources added. Were it to acquire Forbes, Borderless Services would install a new management team and introduce cryptocurrency products such as a Forbes digital wallet, where users could manage digital currencies, some of the sources said.

Ares Management declined to comment.

The sources, who requested anonymity because the matter is confidential, cautioned it is still possible no deal for Forbes will materialize or another bidder could emerge.

Forbes joins other media companies including Bustle Digital Group and BuzzFeed in pursuing a SPAC deal. SPACs are shell companies that raise funds in an initial public offering with the aim of merging with a private company, which becomes public as result. In the past year, they have become a popular alternative to a traditional IPO.

The digital media industry has been consolidating as media brands try to build scale in order to sell subscriptions and appeal to advertisers. Industry executives and dealmakers see SPACs as a popular option to help finance acquisitions for multiple media properties.

Forbes was valued at $475 million in 2014 when Integrated Whale Media bought a majority stake in the company from the Forbes family and investment group Elevation. Chinese conglomerate HNA Group made an unsuccessful bid to acquire a majority stake in Forbes in 2017, Reuters reported at the time.

As one of the oldest media outlets in the United States, Forbes publishes its flagship magazine which reaches 6 million readers. Founded by B.C. Forbes in 1917, it has long championed capitalism and entrepreneurship and is known for its annual list of the world’s wealthiest people.

The company has been undergoing a digital transformation amid declining print revenue. It has been doubling down on expanding key franchises like Under 30 and live events, most of which have become virtual during the COVID-19 pandemic. It says its digital platform now reaches more than 140 million people with 40 global editions.

Source: Reuters – Exclusive Forbes pursues SPAC talks amid new takeover interest -sources

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Private Equity

Beyond the fanfare and SEC warnings, SPACs are here to stay

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The number of SPACs in the deep tech sector was skyrocketing, but a combination of increased SEC scrutiny and market forces over the past few weeks has slowed the pace of new SPAC transactions. The correction is an inevitable step on the path to mainstreaming SPACs as an alternative to IPOs, but it won’t cause them to go away. Instead, blank-check vehicles will evolve and will occupy a small and specialized — but important — part of the startup financing landscape.

The tsunami of SPAC financings sparked commentary from all corners of the capital markets community, from equity analysts and securities lawyers to VCs and fund managers — and even central bankers. That’s understandable, as more than $60 billion of SPAC deals have been announced since the beginning of 2020, plus $55 billion in PIPE capital, according to investment bank PJT Partners.

The views debated by finance experts often relate to the reasonableness of SPAC pricing and transaction structures, the alignment of incentives for stakeholders, and post-merger financial and stock price performance. But I’m not going to add another voice to the debate on the risk-reward calculus.

As the co-founder of a quantum computing software startup who worked in financial markets for two decades, I’d like to offer my perspective on two issues that I think my peers care more about: Can SPACs still solve the funding problem for capital-intensive, deep tech startups? And will they become a permanent financing option?

Keeping the lights on at deep tech startups

I believe that SPAC financings can solve a major problem for all capital-intensive technology startups: the need for faster — and potentially cheaper — access to large amounts of capital to fund product development over multiple years.

SPACs have created a limitless well of capital that deep tech startups are diving into. That’s because they are proving to be more attractive than other sources of financing, such as taking investment from later-stage VC funds or growth equity funds with finite fund sizes and specific investment themes.

The supply of growth capital from these vehicles has been astounding. In 2020, SPACs alone raised more than $83 billion via 248 IPOs, which is equal to a third of the total $300 billion raised by the entire global VC community. If the present rate of financings had continued, the annual amount of SPAC financings would have been on par with the total R&D expenditure of the U.S. government —  roughly $130 billion to $150 billion.

This new supply of capital can let startups keep the lights on, helping them address a practical need while they develop products that may take a decade to field. Before SPACs, any startup that wanted to remain independent had to lurch from one round of VC financing to the next. That, as well as the intense IPO process, is a major time sink for management teams and distracts them from focusing on product development.

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Source: https://techcrunch.com/2021/05/05/beyond-the-fanfare-and-sec-warnings-spacs-are-here-to-stay/

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SPAC rumor mill churns over autonomous truck software developer Plus

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Startup ‘open to all kinds’ of capital raising but mum on blank-check merger

Self-driving truck software startup Plus is reportedly in talks to merge with the same investor group that brought public electric vehicle startup Canoo Inc. (NASDAQ: GOEV), school bus maker Blue Bird Corp. (NASDAQ: BLBD) and flatbed logistics specialist Daseke Inc. (NASDAQ: DSKE).

Rumors of the Cupertino, California-based startup aligning with a special purpose acquisition company (SPAC) have circulated for months. Bloomberg reported Friday that Plus is in talks with Hennessy Capital Investment Corp. V (NASDAQ: HCIC) in a deal that could be announced as soon as this week.

“We’re very open to all kinds of methods to raise capital and provide resources for further development of our technology and company,”  Plus co-founder and CEO David Liu told FreightWaves in a March interview. “We don’t comment on rumors.”

According to Bloomberg, Plus would be valued at more than $3 billion and raise $500 million to $600 million through Hennessy’s latest blank-check company, a shell that raises money from investors in an initial public offering to target a company for merger.

The latest Hennessy SPAC raised $345 million in a January IPO. More money could accumulate through a private investment in public equity (PIPE), where mutual and hedge funds purchase shares, typically priced at $10. They often receive a partial warrant for each share for later redemption at $11.50.

After a year and half in which more than 500 SPACs have launched, the Securities and Exchange Commission is scrutinizing warrant accounting and whether financial projections should get liability protection. Traditional IPOs are prohibited from making future revenue and profit projections.

Chinese backing

Plus was founded by Liu and Stanford University classmate Shawn Kerrigan in 2016. Financial backers include Shanghai Automotive Industry Corp.,GSR Ventures Management and the Chinese long-haul company Full Truck Alliance.

Plus has raised $420 million in recent months, much of it from Chinese investors. It has a minority interest in a joint venture with Chinese-owned First Auto Works and begins production of Level 4 robot trucks in China this quarter. Each truck has a safety driver behind the wheel.

The latest $200 million funding round in February attracted new investors including Guotai Junan International Holdings and Citic Private Equity Funds Management Co. FountainVest Partners and ClearVue Partners co-led a $220 million expansion of the round in March.

Adding partners

Plus works with Chinese delivery company SF Holding Co., which uses its PlusDrive software stack on driver-monitored routes that can cover more than 900 miles a day. The company deals with four of the world’s top 10 truck makers, Liu said.

It recently signed a memorandum to work with Europe’s IVECO to equip its trucks with the PlusDrive system and is collaborating with Cummins Inc. (NYSE: CMI) to add its software to natural gas trucks made in the Cummins Westport joint venture.

Plus is one of at least six autonomous trucking software developers jockeying to lead in the technology that could eventually remove drivers from heavy-duty trucks operating on repeatable routes or in hub-to-hub arrangement.

Liu said that it could take billions of driver-monitored miles to assure driverless trucks are safe.

The competition

San Diego-based TuSimple Holding (NASDAQ: TSP) went public in April at a valuation of about $8 billion. Its shares have traded slightly below the $40 where they traded at their debut.

TuSimple operates 50 Level 4 software-equipped trucks with safety drivers that haul freight in the southwest U.S. It plans a fourth-quarter driverless pilot in Arizona. The company is developing a self-driving Class 8 truck with Navistar International Corp. (NYSE: NAV) targeting deliveries in 2024.

Others competing to lead include Alphabet’s (NASDAQ: GOOGL) Waymo Via, whose technology was adapted from the Google self-driving car project. It is developing its fifth-generation software system for Daimler Trucks (OTC: DDAIF). Aurora Innovation is working with Volvo Group (OTC: VLVLY) and PACCAR Inc. (NASDAQ: PCAR) on self-driving trucks. Startups Embark Trucks and Kodiak Robotics Inc. are deep in Level 4 technology testing and moving revenue-generating loads from Arizona to California and in Texas respectively.

Source: FreightWaves – SPAC rumor mill churns over autonomous truck software developer Plus

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Buffett Explains Why SPAC Mania Won’t Go on Forever

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The model of deploying other people’s money is a recipe for wasting resources

At the Berkshire Hathaway (BRK.AFinancial) (BRK.BFinancial) annual meeting this weekend, Warren Buffett (TradesPortfolio) explained how growing competition among SPAC funds for deals would lead to the industry’s demise.

“It’s a killer. The SPACs generally have to spend their money in two years, as I understand it. If you put a gun to my head to buy a business in two years, I’d buy one,” Buffett said. “There’s always pressure from private equity funds.”

Special purpose acquisition companies, or blank-check companies, have grown in popularity on Wall Street in times of easy money. SPAC deals finalized in the 2019-20 period jumped 400%, according to Dealogic.

“That won’t go on forever, but it’s where the money is now, and Wall Street goes where the money is,” Buffett said. “SPACs have been working for a while, and if you secure a famous name on it you could sell almost anything.”

Buying a business in a rush isn’t the only thing that is wrong with SPACs. The whole model of raising acquisition funds without having a clear vision of what you want to buy and why you want to buy is in sharp contrast with the traditional acquisition process, as explained by Buffett in his 2020 annual letter to shareholders:

“Charlie and I will simply deploy your capital into whatever we believe makes the most sense, based on a company’s durable strengths, the capabilities, and the character of its management, and priceIf that strategy requires little or no effort on our part, so much better.”

In short, the SPAC model of deploying other people’s money is a recipe for wasting resources: buying the wrong company at the wrong time and for the wrong price.

Wall Street is littered with examples of such acquisitions.

Source: GuruFocus – Buffett Explains Why SPAC Mania Won’t Go on Forever

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‘SPACs Attack’ Recap: Looking Back At 5 SPAC Deals, Rumors And Top Headlines

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The week kicked off with a large SPAC deal announced on Sunday, bringing a new global sports betting and online casino company public. Several other SPAC deals were announced throughout the week along with a couple rumors that could be worth a watch this week. Benzinga’s “SPACs Attack” covered the deals and news of the week.

Here is a look back at the announced deals, rumors and some top headlines.

SPAC Deals

On Sunday, online sports betting and gaming company Super Group Holding, the owner of Betway and Spin, announced a SPAC deal with Sports Entertainment Acquisition Corp SEAH 1.17% valuing the company at $4.75 billion. Super Group is licensed in 23 jurisdictions with plans to use its scale and technology to expand into additional territories. In the 12-month period ending March 2021, Super Group had over $42 billion of wagers and 2.5 million monthly unique active customers.

The company plans to expand the Betway brand in the United States. Super Group entered into an agreement with Digital Gaming Corporation for the rights to 10 US states. Betway has over 60 brand partnerships including the NBA’s Chicago Bulls, Golden State Warriors, Brooklyn Nets and Los Angeles Clippers.

Super Group had net gaming revenue of $1.1 billion in 2020 and EBITDA of $259 million. The company is estimating revenue to be $1.6 billion in fiscal 2021 and $1.8 billion in fiscal 2022.

Clarus Therapeutics announced a SPAC deal with Blue Water Acquisition Corp BLUW 0.5% valuing the company at $379 million. The pharmaceutical company develops metabolic therapies for men and women. Clarus said the acquisition will help accelerate the commercialization of JATENZO, a oral testosterone replacement therapy. Going public will also help the company fund additional items in its pipeline.

Enjoy Technology announced a $1.2 billion SPAC merger with Marquee Raine Acquisition Corp MRAC 0.2%. Enjoy has multi-year commercial relationships with customers including AT&T T 0.26% in the United States, BT Group in the United Kingdom, Rogers Communication RCI 0.92% in Canada and select Apple Inc AAPL 1.51% stores in the United States. Enjoy is led by founder and CEO Ron Johnson, who helped develop Apple’s retail stores and transform an omnichannel approach for Target TGT 0.2%.

The company says it has an edge on reaching customers in their homes that e-commerce brands cannot deliver.

End-to-end digital manufacturing company Shapeways announced a SPAC merger with Galileo Acquisition Corp GLEO 0.49% valuing the company at $410 million. Desktop Metal DM 6.05% invested in the PIPE on the deal and has a partnership with Shapeways. Targeting industries like medical, industrial, automotive and aerospace, Shapeways has 11 technologies for 90 materials.

The company has delivered over 21 million parts to 1 million customers in 160 countries. Fiscal 2020 revenue for Shapeways was $32 million. Estimates from the company call for revenue to hit $44 million in fiscal 2021 and $86 million in fiscal 2022. The company estimates revenue of $400 million in fiscal 2025 with less than 1% of the total addressable market.

Next-gen hospitality company Sonder announced a SPAC deal with Gores Metropoulos II GMII 0.4% valuing the company at $2.2 billion. Sonder operates more than 300 properties across 35 markets in eight countries. The company works with property owners to offer rentals to customers on a daily, weekly or monthly basis.

Sonder had revenue of $116 million in fiscal 2020. The company estimates revenue to hit $173 million in 2021 and hit $4 billion by the year 2025 led by a travel market recovery worldwide.

SPAC Rumors

Self-driving truck company Plus is in talks to merge with Hennessy Capital Investment Corp V HCIC 1.41%, according to Bloomberg.

Financial media company Forbes is exploring a SPAC deal, Reuters reports. The company could also be sold in a bidding process that has attracted several companies. Forbes reaches an estimated audience of 140 million people with its digital platform.

Israeli cleantech company Tipa is considering a SPAC deal to go public. Calcalist reports the deal could value the company that develops compostable flexible packaging at $500 million.

Headline News

Shares of Skillz SKLZ 2.34% started the week off strong with a defensive call coming from Ark Funds, which owns shares of the former SPAC. Skillz has been the target of several short reports. Ark is not bothered by the claims and believes the NFL partnership is a major catalyst for the company.

Luminar Technologies LAZR 7.48% announced a partnership with Airbus to test technologies for autonomous flight and obstacle detection. The two companies will work together on aircraft sensing and perception.

Landry’s CEO Tilman Fertitta said his restaurant group, which is merging with Fast Acquisition Corp FST 0.08%, will accept Bitcoin and other digital currencies. The CEO said 80% to 90% of the restaurants will accept cryptocurrency in the next 90 days.

Latch, which is merging with TS Innovation Acquisition Corp TSIA 0.1%, announced preliminary first quarter revenue. The company sees first quarter revenue growing 135% to 140% and bookings to be up 86% to 88% year-over-year.

The merger between Star Peak Energy Transition Corp STPK 0.11% and Stem was approved. Shares of the newly merged company now trade as ticker STEM.

The launch of Ultium Charge 360 by General Motors Company GM 0.94% saw the automotive giant partner with seven charging network companies. Among the partners are ChargePoint Holdings CHPT 1.44% and EVgo, which is going public with Climate Change Crisis Real Impact I Acquisition CLII 0.69%.

Apex Clearing announced first quarter net revenue growth of 98% year-over-year. The company saw customer accounts grow 85% year-over-year in the first quarter, hitting more than 14.4 million. The company is merging with Northern Star Investment Corp II NSTB.

Source: Benzinga – ‘SPACs Attack’ Recap: Looking Back At 5 SPAC Deals, Rumors And Top Headlines

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