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Aiming to become the global leader in chip-scale photonic solutions by deploying Optical Interposer technology to enable the seamless integration of electronics and photonics for a broad range of vertical market applications

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Guernsey21

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posted on Jul 14, 2020 11:09AM

seems topical, from NYT in my inbox this AM

The blank-check boom

The specialized deal machines known as blank-check companies — formally “special purpose acquisition companies,” or SPACs — are having a moment, striking ever-bigger takeovers and raising billions in new funds.

First, a primer. SPACs raise money from stock-market investors for the explicit purpose of buying unspecified privately traded companies. (Shareholders in blank-check funds don’t have a say on picking deals.) The targets essentially assume the SPAC listing, transforming them into public companies. If no deal is struck within a certain time, usually two years, the funds are dissolved.

They’re hot commodities now, having last enjoyed a popularity in the 1980s. At least 41 SPACs have gone public so far this year, according to SPACInsider.com, compared with 59 for all of 2019.

• The hedge fund magnate Bill Ackman added $1 billion to his target for his forthcoming SPAC, Pershing Square Tontine, for a total of $4 billion. That would make it the biggest blank-check fund to date.

• Fisker, an upstart electric-car maker, plans to go public by merging with the blank-check fund Spartan Energy, which is backed by Apollo Global Management, in a $2.9 billion deal. Nikola went public last month through another such deal (with VectoIQ, backed by Fidelity and ValueAct).

• The health services company MultiPlan agreed on Sunday to merge with Churchill Capital Corp III, a SPAC created by the high-profile banker Michael Klein, in a deal valued at $11 billion, the biggest blank-check merger to date.

• Richard Branson’s Virgin Galactic space-tourism business and the fantasy-sports site DraftKings both went public last year via blank-check mergers.

For selling companies, SPACs are quicker and easier than staging an I.P.O., which involves wooing prospective investors, S.E.C. document reviews and uncertainty caused by volatile markets. And they’re often more feasible than direct listings, which tend to be better for well-known businesses like Spotify.

• As stock markets remain vibrant, the average I.P.O. for blank-check funds this year has been about $321 million, according to SPACInsider, far more than in recent years.

But there are downsides, The Wall Street Journal notes. SPACs were once associated with stock-market frauds, and investors in blank-check companies don’t get a say in target businesses.

• Sometimes deals don’t happen: Far Point, a SPAC backed by the hedge fund mogul Dan Loeb and Thomas Farley, a former president of the New York Stock Exchange, is urging its investors to reject the $2.6 billion takeover of Global Blue, a tax-free shopping company.