May is turning into SPAC season for reasons both good and bad
Let’s get the bad news out of the way first
There are currently five SPACs that have set dates for “special meetings” to vote on extending their completion deadlines, with two more due at the end of June that are sure to do the same. This is a bad trend for SPACs. At a special meeting where shareholders are given the opportunity to vote on extending, shareholders are also given the opportunity to redeem. Given that most shareholders have already waited about two years for the SPAC to complete, it’s no wonder that many lose faith and cash it in. And with good reason…
Each time there is a redemption, the trust gets reduced as shareholders are paid back, but what also gets reduced are the number of shares subject to redemption so that by the next voting deadline the pro rata amount is substantially increased. Plus, now the amount of cash left for an acquisition is also substantially reduced (usually) making a good acquisition even less likely.
However, there should be exceptions. There should always be room for SPACs that have previously announced an acquisition and just need a little bit of extra time to wrap things up, albeit with a short extension. But SPACs that extend without announcing anything? No, it’s just bad for the product overall.
Looking at the table below, you can see how crazy the pro rata amounts in trust start to get once you go down the path of extending. This will only lead to mediocre/terrible deals and eventually… a bad reputation for SPACs.
Upcoming Shareholder Votes
| Name | Symbol | Share Price (a/o close 5/7/18) | Pro Rata Portion of Trust Account | Date of Vote/Special Meeting | Extension Date |
|---|---|---|---|---|---|
| National Energy Services Reunited | NESR | $10.09 | $10.09 | May 18, 2018 | |
| Stellar Acquisition III, Inc. | STLR | $10.29 | $10.38 | May 24, 2018 | Nov. 26, 2018 |
| Landcadia Holdings, Inc. | LCA | $10.05 | $10.10 | May 30, 2018 | Dec. 14, 2018 |
| Jensyn Acquisition Corp. | JSYN | $10.56 | $10.65 | June 4, 2018 | Sept. 3, 2018 |
| Electrum Special Acquisition Corporation | ELEC | $10.50 | $10.48 | June 4, 2018 | Oct. 5, 2018 |
| Origo Acquisition Corp. | OACQF | $10.80 | $10.92 | June 12, 2018 | |
| M I Acquisition, Inc. | MACQ | $10.40 | ND* | June 15, 2018 | Sept. 17, 2018 |
Source: SEC.gov
* ND = Not Disclosed as of 5/8/18
Now some good news…
The good news is, Trinity Merger Corp. is expected to price late this week (most likely Thursday, for Friday trading), followed closely by VectoIQ Acquisition Corp. (the week of 5/14) and Trident Acquisition Corp. (the week of 5/21). That’s $675 million in aggregate gross proceeds so far for May.
Additionally, National Energy Services Reunited has set May 18th as the date for their shareholder vote on their proposed combination with Gulf Energy SAOC and National Petroleum Services for an aggregate purchase price of approximately $1.1 billion. The NESR share is currently trading at $10.09 which is the same price as the pro rata per share portion of the trust account.
AGBA (NASDAQ:AGBA) stock is up over +90% this morning following a +211% premarket spike on news it has signed a definitive agreement to combine with social streaming video platform Triller. AGBA, the company itself, was formed by the $555 million combination between a SPAC of the same name and TAG Companies, a financial services firm...
At the SPAC of Dawn Since closing its combination with DHC last month, AI customer engagement firm BEN (NASDAQ:BNAI) has rolled out new partnerships with call center and healthcare clients. And, while it faces a fair bit of competition in the chatbot realm, several high-profile institutions have demonstrated that creating one that provides useful services...
Blue Ocean (NASDAQ:BOCN) provided significantly more texture today in the presentation for its $275 million combination with Asian digital media group TNL Mediagene, which it expects to hit profitability in the second half of the year despite a slight shakeup in financing for the transaction. The first big update in the first investor deck is...
At the SPAC of Dawn A brand new market may have just opened up for space de-SPACs as NASA administrator Bill Nelson announced a shift in the agency’s $11 billion program for a mission to return samples from Mars. Rather than rely on the agency’s internal technologies that would be predicted to get a sample...
Overall deal flow between SPACs and biotech firms has slowed over the last year, but some pending FDA changes could breathe new life into particular business models within the space. In particular, the FDA has asked Congress as part of its 2025 Legislative Proposals to eliminate the interchangeability designation for biosimilar medications, claiming the existing...