Announcements
Special purpose acquisition companies (SPACs) have experienced explosive popularity over the last few years. SPACs continue to lead the initial public offering (IPO) market by a wide margin over all other industry sectors, with 46 SPACs completing IPOs and raising over $10 billion in the U.S. markets in 2018 and an additional 47 SPACs completing IPOs and raising over $11 billion in 2019 through the end of October. Sidley has been at the forefront of this important developing market.
We regularly represent SPAC sponsors in structuring SPACs; SPACs, target companies and their private equity sponsors in SPAC business combination transactions; investors considering investments in SPACs; and financing sources in SPAC debt and equity financing arrangements. As SPACs have become a more mainstream and economically attractive vehicle for realizing shareholder exit value and accessing the public markets, we have seen a significant increase in private equity interest in this sector and counseled numerous private equity funds and their portfolio companies regarding the unique liquidity and exit scenarios afforded by the SPAC structure. With robust experience advising parties on all sides of a SPAC deal, we have access to the divergent perspectives of multiple constituencies, as well as a deep understanding of both the opportunities and challenges presented by the SPAC structure.
How We Add Value
We represent clients in complex, multi-billion dollar SPAC transactions across a variety of industries. To help our clients achieve a competitive edge in successfully structuring and executing on their SPACs, we provide coordinated advice utilizing a multidisciplinary team of practices, including global finance, private equity, M&A, capital markets and securities, and numerous industry-specific regulatory practices, throughout the entire life cycle of SPAC transactions.
Our work includes helping clients navigate all aspects of SPAC formation, promotion and fundraising, SPAC IPOs, the SPAC business combination (or “de-SPACing”) M&A process, including the back-end listing of the combined public operating company and the related SEC filings and review processes, addressing common NASDAQ and NYSE issues that arise with SPACs, and structuring complex debt and equity financing arrangements to facilitate the closing of SPAC business combinations, such as common and preferred equity PIPE (private investment in public equity) investments and committed backstop financings (to backstop redemptions from the SPAC trust account). We also regularly advise private equity funds and their portfolio companies and hedge fund clients regarding the securities and tax aspects of various SPAC structuring and investment matters.
Key players in SPAC deals depend on our lawyers for guidance, including private equity firms, hedge funds, private companies and investor groups, target companies and lenders. Leveraging Sidley’s global network, we can quickly mobilize resources to address time-sensitive issues at every stage of the SPAC transaction. Additionally, our multidisciplinary approach to SPAC transactions brings to bear the combined knowledge of lawyers from practice groups across the firm.
Representative Matters*
Our recent SPAC work (since 2015) includes representing:
- Hennessy Capital Acquisition Corp. III, a SPAC, in its acquisition of environmental and waste management services provider NRC Group, a portfolio company of the J.F. Lehman private equity firm, in a cash/stock deal valuing NRC Group at over $750 million and launch of NRC Group as a public company (NYSE: NRCG). In connection with the acquisition, we also represented the SPAC in its convertible preferred and common equity PIPE and backstop financing transactions.
- ConvergeOne, a Clearlake Capital-backed IT services provider, in its $1.2 billion business combination with Forum Merger Corporation, a NASDAQ-listed SPAC, and launch of ConvergeOne as a public company (NASDAQ: CVON) and its subsequent $1.8 billion sale to affiliates of CVC Capital Partners.
- Sirius International Insurance Group, a Bermuda-based reinsurance holding company, in its all-stock merger with Easterly Acquisition Corp., a NASDAQ-listed SPAC. This innovative transaction, a U.S.-Bermuda cross-border, tax-free merger, resulted in Sirius becoming a publicly traded company (NASDAQ: SG) with a $2.2 billion initial market capitalization. In connection with the merger, we also represented Sirius in the significant related preferred and common equity PIPE and backstop financing transactions.
- Several investors participating in a common equity PIPE financing in New Frontier Corporation, a NYSE-listed SPAC, in connection with the SPAC’s pending acquisition of United Family Healthcare.
- Luxor Capital Group in its senior secured term loan and convertible debt financing for the initial SPAC-related acquisition of Waitr, Inc. (NASDAQ: WTRH) and its subsequent acquisition of BiteSquad.com, LLC.
- Kaleyra, a cloud communications software provider, in its agreement to combine with GigCapital, a NYSE-listed SPAC.
- Hennessy Capital Acquisition Corp. II, a SPAC, in its all-stock merger with Texas-based Daseke, Inc., a specialty trucking and logistics company and leading consolidator in the open-deck freight market in North America. As a result of this high-profile merger, Daseke became a publicly traded company (NASDAQ: DSKE) with an initial enterprise value of approximately $700 million. In connection with the merger, we also represented the SPAC in significant related debt and equity financing transactions, including convertible preferred and common equity PIPE and backstop financings, and the negotiation of a complex earn-out with the sellers.
- Xynomic Pharmaceuticals, Inc. in its $450 million all-stock merger with Bison Capital Acquisition Corp., a SPAC, and launch of Xynomic as a public company (NASDAQ: XYNO). In connection with the merger, we also represented the target company and sellers in the negotiation of a significant common stock earn-out arrangement and in the related SPAC common equity backstop financing.
- Hennessy Capital Acquisition Corp., a SPAC, in its acquisition of school bus manufacturer Blue Bird Corporation from Cerberus Capital in a cash/stock deal valuing Blue Bird at approximately $500 million and launch of Blue Bird as a public company (NASDAQ: BLBD). In connection with the acquisition, we also represented the SPAC in its warrant tender offer and convertible preferred and common equity PIPE and backstop financings.
- William Blair, as financial adviser to Levy Acquisition Corp., a SPAC, in its $500 million acquisition of Del Taco Restaurants, Inc. (NASDAQ: TACO).
- A hedge fund client in its private equity investment in connection with the IPO of Churchill Capital Corp., a NYSE-listed SPAC.
- Numerous private equity and hedge fund clients, providing advice regarding various SPAC structure/formation, investment and business combination transaction matters, including in connection with sale processes.
*Includes matters handled by lawyers prior to joining Sidley
