Forbes is going public via $630 million SPAC merger with Magnum Opus Acquisition

In this photo illustration a Forbes logo seen displayed on a smartphone.

Forbes Global Media is going public through a blank check merger with Magnum Opus Acquisition in a deal that will value the combined entity at $630 million, according to an announcement on Thursday.

The business news organization, which publishes Forbes magazine, is expected to raise approximately $600 million of gross proceeds, which comprises around $200 million of cash held in Magnum Opus’ trust account and roughly $400 million private investment in public equity, or PIPE, the announcement said.

The transaction, which is expected to close in the fourth quarter of 2021 or the first quarter of 2022, will be used to further the digital transformation push at the company.

Forbes said it will also use its fund to “convert readers into long-term, engaged users of the platform, including through memberships and recurring subscriptions to premium content and highly targeted product offerings.”

The management team at Forbes will remain in place after the deal under the leadership of CEO Mike Federle, the announcement said.

Forbes is best known for curating lists of wealthy business icons and influential leaders around the world. The brand reaches more than 150 million people and covers 76 countries.

Magnum Opus Acquisition is a blank-check firm led by CEO Jonathan Lin. It is sponsored by L2 Capital, a private investment firm.

Forbes is just the latest media organization to go public. In June, Buzzfeed agreed to go public, also via SPAC acquisition.

SPACs, shell companies that list with the aim of merging with private companies and taking them public, have exploded in popularity in the past few years.

This method is typically done in lieu of an IPO or a direct listing and has garnered support from Wall Street heavyweights as well as pop icons and professional athletes.

But the frenzy is also drawing the attention of regulators, who are looking into tightening the rules, particularly around projections of future earnings potential and conflicts of interest among deal makers.

In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. Over halfway through 2021 alone, data already show 414 SPACs that have raised $121 billion, comprising 44% of initial public offerings.

The past few months however have seen a slight cooling off in the market, as first-day trading spikes that were common in the space earlier this year evaporate.

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Another SPAC deal falls apart after Topps trading cards terminates merger with sponsor

Trader NYSE
A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 5, 2020.

  • Mudrick Capital Acquisition and Topps Company have terminated their proposed merger.
  • The cancellation of the proposed SPAC deal comes after the MLB said it would not renew its contract with Topps.
  • The SPAC boom is beginning to deflate as deals fall apart and shares of merged companies plummet.
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Another SPAC deal has been canceled, with Mudrick Capital Acquisition and Topp Company terminating their proposed merger.

The mutual termination of the proposed merger comes after the Major League Baseball and the Major League Baseball Players Association decided to not renew their respective agreements with Topps when they come up for renewal in 2025 and 2022, respectively.

The MLB instead agreed to a new contract with Fanatics, which recently raised $325 million from investors like Jay-Z at a valuation of $18 billion.

The decision to terminate the SPAC deal came just one week before shareholders were set to vote on the proposed merger.

Shares of Mudrick Capital traded down by about 2% in Friday trades, below its $10 per share SPAC price.

This isn’t the only SPAC to have a bumpy road since it raised money from investors. Bill Ackman’s Pershing Square Tontine Holdings SPAC canceled its proposed acquisition of a stake of Universal Music Group. Now Ackman is proposing to return the cash he raised from investors as he looks at different investment vehicles for completing deals.

And even for companies that managed to complete a SPAC merger, many have seen negative returns, with one falling as much as 90% from its $10 IPO price. The decline in post-merged SPACs comes after investors get their first earnings reports as a public company, which often show mounting losses and spotty growth.

2021 will remain a record year for SPACs regardless of how the next few months play out. Year-to-date, there have been 413 SPAC deals that have raised a total $121.7 billion.

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Billionaire investor Bill Ackman’s SPAC is reportedly being sued for not operating as a blank-check firm

bill ackman
  • Bill Ackman’s SPAC is being sued for not operating as a blank-check firm, the New York Times reported.
  • They argued that Ackman’s SPAC has behaved more like an investment company than an operating company.
  • Ackman’s SPAC pushed back saying it has never held investment securities that would require it to be registered under the Act.
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Billionaire hedge fund manager Bill Ackman’s SPAC is being sued for not operating as a blank-check firm, the New York Times first reported Tuesday, a case that could affect the broader industry amid a boom in the past year.

Ackman’s Pershing Square Tontine Holdings was hit with a lawsuit by former SEC Commissioner Robert Jackson and Yale law professor John Morley.

Both argued that Ackman’s SPAC is operating more like an investment fund than an operating company -similar to his hedge funds – which means it should instead be regulated by the Investment Company Act of 1940.

Investing in securities is basically the only thing that PSTH has ever done,” the complaint viewed by Insider said, adding that buying stocks is not what a SPAC is supposed to do.

The lawsuit, filed in US District Court in Manhattan, also pointed to the warrants – the right to purchase common stock at a certain price – that sponsors and directors would receive.

“This staggering compensation was promised at a time when the returns to the Company’s public investors have starkly underperformed the rest of the stock market,” the complaint said.

Pershing Square pushed back against the lawsuit Tuesday saying it has never held investment securities that would require it to be registered under the Act – and does not intend to do so in the future.

“We believe this litigation is totally without merit,” the statement said. “The complaint bases its allegations, among other things, on the fact that PSTH owns or has owned US Treasurys and money market funds that own US Treasurys, as do all other SPACs while they are in the process of seeking an initial business combination.”

In July, Ackman scrapped his plan to buy 10% of Universal Music for $4 billion after federal regulators poured cold water on the proposed transaction, the billionaire announced in his shareholders’ letter.

Days after, Ackman lamented his nixed SPAC deal but hinted he already has alternative targets in mind.

SPACs, shell companies that list with the aim of merging with private companies and taking them public, have exploded in popularity in the past few years.

This method is typically done in lieu of an IPO or a direct listing and has garnered support from Wall Street heavyweights as well as pop icons and professional athletes.

Ackman, for his part, has tried to rewrite the rules for his SPAC.

For instance, he said he will be “taking no compensation” in a bid to appeal to more investors. “We created the most investor-friendly SPAC in the world,” Ackman said, adding that SPACs are an easier route to public markets than a traditional IPO.

But given the frenzy around blank-check listings, regulators have begun looking into tightening the rules.

In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. Over halfway through 2021 alone, data already show 412 SPACs that have raised $121 billion, comprising 53% of initial public offerings.

The past months however have seen a slight cooling off in the red-hot SPAC market as first-day trading spikes that were common in the space earlier this year begin to evaporate.

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Churchill Capital shareholders approved the SPAC’s merger with Lucid Motors after CEO Michael Klein appealed directly to retail investors

Lucid Air.
Lucid Motors plans to go public in a $24 billion tie-up with a SPAC

  • Churchill Capital Corporation IV is set to close on its merger of EV start-up Lucid Motors on Friday.
  • The closing of the merger was delayed earlier this week after not enough shareholders had cast a vote on the deal.
  • It took a personal appeal to retail investors from Churchill chairman Michael Klein to get approval.
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Shareholders of Churchill Capital Corporation IV approved its merger with EV start-up Lucid Motors following a personal appeal by Churchill chairman Michael Klein to retail investors using trading apps like Robinhood.

The merger deadline was extended on Thursday after not enough shareholders had voted.

“We welcome all of the new shareholders,” Klein said in an investor call on Thursday. “However, we need you to participate in the election process. In particular, if you are participating from the new trading platforms, the new apps that may not necessarily be directing you clearly to a voting service, we need your vote,” Klein said, adding that it “literally takes one minute.”

Churchill Capital has been a popular SPAC stock with retail investors, but it is likely less so after falling 63% from its mid-February peak of $64.84. The SPAC was often a top-mentioned name on Reddit’s Wall Street Bets forum.

Klein also said that e-mail spam filters could have played a role in so few shareholders participating in the scheduled vote and approving the deal on time.

“It should have been mailed or emailed to all stockholders. I know this is technical. And I know that some of those emails may have gone into your spam folder or otherwise. But it’s critical and important to vote and to have the tools to vote,” Klein said. “I need to remind you to check your emails, and check your spam emails.”

Ultimately, 98% of votes cast were in support of the proposed merger between Churchill and Lucid. Shares of the company were up as much as 7% in Friday trades.

Lucid Motors will delist from the New York Stock Exchange and trade on the Nasdaq under the symbol “LCID” beginning on July 26.

Churchill Capital stock chart

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The SEC is reportedly looking into conflicts of interest among major banks in the SPAC deal-making process

The headquarters of the U.S. Securities and Exchange Commission (SEC) are seen in Washington, July 6, 2009. REUTERS/Jim Bourg
The headquarters of the U.S. Securities and Exchange Commission are seen in Washington

  • The SEC is investigating banks over conflicts of interest in the SPAC deal-making process, Reuters first reported.
  • In particular, the regulator is looking into instances of banks acting as underwriter and adviser on the same deal.
  • The SEC has requested information from top SPAC underwriters including Morgan Stanley and Goldman Sachs.
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The US Securities and Exchange Commission is investigating major banks over conflicts of interest in the SPAC deal-making process that exploded in the past year, Reuters first reported.

In particular, the regulator is looking into instances wherein the banks acted both as the underwriters and the advisers on the same SPAC deal and whether certain fee structures may have incentivized underwriters to secure unsuitable mergers, sources told Reuters.

“The big issue for the SEC is to understand if the advisers are conflicted,” one of the sources told Reuters.

The SEC, according to sources, has requested information from top SPAC underwriters including Citigroup, Credit Suisse, Morgan Stanley, and Goldman Sachs. Requests do not imply malpractice.

SPACs are shell companies that list with the aim of merging with private companies and taking them public.

This method is typically done in lieu of an IPO or a direct listing and has garnered support from Wall Street heavyweights as well as pop icons and professional athletes.

Management teams of SPACs, also known as sponsors, generally pay banks a 5.5% fee for underwriting the process. Banks, however, can earn more if they also represent the merger target.

Such conflict of interest could harm investors, sources told Reuters.

Under the current law, banks are not required to disclose their fees in regulatory filings while law and accounting firms are.

SPACs have exploded in popularity in the last year. In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. But over halfway through 2021 alone, data already show 368 SPACs that have raised $190 billion, comprising 59% of initial public offerings.

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Ford-backed EV battery producer to go public via SPAC merger at a $1.2 billion valuation

Solid Power Inc batteries
  • Solid Power announced it is going public via a SPAC merger in a deal that would value the entities at $1.2 billion.
  • The company is expected to have $600 million in cash, including $165 million from private investors.
  • Ford Motors and BMW recently participated in the $135 million Series B funding of Solid Power in May.

Electric-vehicle battery producer Solid Power on Tuesday announced it’s going public by merging with blank-check firm Decarbonization Plus Acquisition Corporation III in a deal valued at $1.2 billion.

The company is expected to have approximately $600 million in cash, including $165 million from investors such as Koch Strategic Platforms, Riverstone Energy Limited, Neuberger Berman funds, and Van Eck Associates Corporation. The capital will be used to fund operations and growth.

Ford Motors and BMW recently participated in the $135 million Series B funding of Solid Power in May. The two companies also expanded partnerships with Solid Power to secure all solid-state batteries for future electric vehicles.

Solid Power produces rechargeable batteries for electric vehicles and mobile power markets. The company claims its production mirrors lithium-ion manufacturing processes while eliminating certain expensive and timely steps.

Upon closing of the transaction, which is expected to be completed in the fourth quarter of 2021, the combined company will trade under the Nasdaq ticker “SLDP.”

Solid Power is expected to have a nine-person board composed of a majority of independent directors and will continue to be led by Solid Power’s existing management team.

Other electric vehicle makers went public via SPAC this year such as Lucid Motors and Nikola Corp.

SPACs, shell companies seeking to merge with private companies with the intention of taking them public, have exploded in popularity in the last year.

In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. But in the sixth month of 2021 alone, data already show 340 SPACs that have raised $106 billion, comprising 61% of initial public offerings.

Read more: A client portfolio manager at Cathie Wood’s Ark Invest shares which of its ETFs are projected to see the most growth over the next 5 years, and explains the recent downturn in the broader family

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Wholesale grocery retailer Boxed is set to go public in $900 million SPAC deal

chieh huang boxed

Wholesale grocery retailer and courier Boxed is set to go public in a deal with Seven Oaks Acquisition Corp., a special purpose acquisition company (SPAC), that would value the combined entity at nearly $900 million.

The deal is expected to close in the fourth quarter of 2021 and should provide Boxed with about $334 million in net cash proceeds, including a $120 million private investment from investors including Brigade Capital Management, Avanda Investment Management, and Onex Credit.

Boxed was founded in August 2013 by current CEO Chieh Huang along with Jared Yaman, Christopher Cheung, and William Fong.

The company provides bulk consumables to both businesses and consumers without requiring a store membership and has monetized its proprietary technology through a Software-as-a-Service (“SaaS”) offering, inking a multi-year SaaS partnership agreement with Aeon Group, one of Asia’s largest retail conglomerates.

“We are excited to take this important step forward to position Boxed for our next phase of growth,” Mr. Huang said in a press release announcing the deal.

“This capital will also allow us to fund B2B growth, third-party marketplace expansion and drive our unique SaaS business. We look forward to partnering with the seasoned team at Seven Oaks as we leverage their operational and public company expertise,” he added.

Gary Matthews, the chairman and chief executive officer of Seven Oaks Acquisition Corp., will serve as Boxed’s chairman of the board when the business combination is complete.

Matthews stepped down from his CEO position at the publicly traded IES Holdings in August of last year then raised nearly $260 million through an initial public offering (IPO) for his SPAC, Seven Oaks.

In a statement discussing the Boxed deal, Matthews said:

“Boxed is a leading e-commerce platform with significant competitive advantages and multiple opportunities to accelerate growth and drive value creation. We are confident that by supporting Chieh and the talented management team with our proven operating playbook, Boxed will continue to achieve success in a rapidly growing market.”

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