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SPAC – special target acquisition corporations – are very profitable in the market in those days. The recent mergers of SPAC DraftKings (NASDAQ: DKNG) and Nikola (NASDAQ: NKLA) went very well. With that in mind, I sought to locate five SPACs that agreed to merge with a personal company.
These transactions are expected to close and complete their opposing mergers in the third or fourth quarter. Subsequently, the existing SPAC inventory symbol will be the symbol of the merged company.
By purchasing one of those SPAC inventories prior to the merger, an investor can enter the floor floor, so to speak. The possibility of massive gains increasing, once the opposite merger comes into effect and inventory changes, is very high.
These are opposite mergers, not IPOs. The explanation is that the inventory of SPAC, the sponsor, has already had its IPO. In the upcoming transactions, the sponsor sends inventories to a personal company. Often, these personal corporations are owned by personal equity funds.
However, the shareholders of the target company end up with the maximum share. In maximum cases, they get more than 80% to 90% of the total shares. As a result, the agreed merger agreement allows its control and board of directors to the merged company.
Therefore, it is considered an “inverted” merger. The developer would normally control the shares and control the company’s board of directors and control after the merger. But in those opposite SPAC mergers, the target company ends up controlling the maximum of the shares and the board of directors. In addition, it controls the liquidity that SPAC raised in its IPO. So, by definition, the transaction is an opposite merger.
These are the SPACs before the merger to consider:
On August 3, FTAC agreed to merge with Paya, an Atlanta-based payment company with $30 billion in transactions. The deal will have an implied business of $1.3 billion. The new symbol will be PAYA.
The agreed transaction, which is expected to close in the fourth quarter, will come with a $200 million capital accumulation known as personal public capital investment (PIPE). In addition, there will be $50 million of other primary co-investors, and FTAC itself has $357 million. As a result, the new company will have $607 million before the transaction fee.
In addition, it turns out that Paya is controlled through a gigantic personal equity fund called GTCR. PIPE’s investment will come with other high-quality investment funds, such as Franklin Templeton (NYSE: BEN) and Wellington Management. The downside is that public shareholders will own only 31% of the merged company. It will decrease after the training of the guarantees. This low level of public ownership tends to increase CAPS.
In addition, the agreement is 19.6 times the VE for adjusted EBITDA in 2021. But its public sector similar to industry averages 26.2 times. Some are 28 times. This means that inventory can increase from 38% to 47%.
But it’s about trading FTAC shares at their IPO value of $10. FTAC is now at $10.39. But it has a potential value of $13.80 to $14.70, according to Paya’s presentation. As a result, this SPAC appears to be undervalued by at least 40%.
The opposite merger with SAMA shares will allow Clever Leaves to raise a net amount of $111 million in money and $37 million in corporate debt with a $255 million commercial price. Once the transaction is complete, the new symbol will be CLVR.
The shares of SAMA and CLVR after the merger are very cheap. This is why. First, the company’s slideshow on page 22 expects a profit of $140 million and an EBITDA of $47 million until 2022.
Second, the market capitalization of SAMA, according to Yahoo! Finance, it’s $165 million. After the merger, there will be 32.9 million fully diluted notable shares. This puts the capitalization in the proforma market of Cleaver Leaves at $334.5 million, the current value of $10.17 for the SAMA stock.
Third, the VE-sales ratio is cheap. For example, $334.5 million divided by $140 million in revenue indicates that the ratio is 2.4 times.
This means that SAMA inventory is very reasonable at the current price. I expected it to increase to 100%.
On August 1, DiamondPeak Holdings agreed to merge with Lordstown Motors, an electric truck manufacturer. The deal is expected to be reached in the fourth quarter, and once the merger is completed, the new Lordstown Motors RIDE symbol.
Lordstown, as a company, bought one of GM’s plants. He now has 27,000 orders, representing $1.4 billion in prospective sales, to manufacture his Endurance electric pickup truck. Lordstown says your EV truck will travel 75 miles consistent with a gallon.
DiamondPeak Holdings rose to $12.25 since its initial public offering of $10 earlier this year. This gives DPHC’s inventory a market cost of $429 million now. However, a corporate filing indicates that SPAC holders will own only 21% of the corporate’s shares. As a result, market capitalization after the merger is now $2.040 million with the current value of $12.25.
Most importantly, DPHC says there will be no more capital requirements. This implies that your valuation is 2 or 3 times higher than sales. Tesla (NASDAQ: TSLA), for example, is 10.8 times its old sales.
Therefore, I believe that the percentage of DPHC will increase by at least 50% to one hundred percent over the next year.
On July 12, Churchill Capital III agreed to merge with MultiPlan, a leading provider of software for fitness insurance companies. The value of the transaction is $11 billion in businessArray Currently, MultiPlan is controlled through a personal equity fund, Hellman and Friedman.
Since the announcement, CCXX has continued to grow. Barron’s says it will be the largest SPAC deal ever made in the United States when the opposite merger is complete. MultiPlan will get $3.7 billion in new liquidity from debt and equity sources.
MultiPlan’s investor presentation shows that it expects adjusted EBITDA of $860 million through 2021. The challenge is that this company is difficult to compare properly. None of its competitors are public.
As a result, CCXX inventory is currently quoted at a proforma ratio of 13.6 times. But if post-merger inventory increased to a proportion of 18 times, inventory would increase by up to 32% over the existing price.
Looks like the company didn’t mark the post-broadcast for CCXX.
The opposite merger transaction has a corporate valuation of $2.9 billion, assuming a value of $10 per SPAQ stock. However, inventory is now over $12.36, so the new electric vehicle is almost 24% higher than $3.6 billion.
By the way, that $2.9 billion valuation figure is included in the press release. But a similar slideshow indicates that the deal is worth $1.9 billion. It is not transparent which one is applied. If the EV number of $1.9 billion is applied, the existing valuation is almost 24% higher than $2.35 billion.
The deal will provide Fisker with a billion dollars. The slideshow implies that it is very cheap. For example, the valuation of $1.9 EV implies 0.6 times an estimated turnover of $3.3 billion in 2023. This also involves 4.3 times an adjusted EBITDA of $441 million in 2023.
Therefore, as SPAQ inventory has increased, the new sales ratio of electric vehicles is 0.76 times. This is a valuation of $1.9 billion at the time of the transaction. But if we assume a valuation of $2.9, after the recent percentage price accumulation, the ratio is 1.2 times. The same applies to EV-EBITDA key figures. Now it’s 5.6 times or 8.37 times.
At the time of writing, Mark Hake, CFA has a position in any of the above titles. Mark Hake runs the Total Return Value Guide, which you can read here.
The five pre-merger elements of SPAC that deserve your attention made the first impression on InvestorPlace.