Act II Global Acquisition Corp. (ACTT), announced this morning that it has further revised its transaction with MacAndrews & Forbes Incorporated, to create Whole Earth Brands. Act II, previously revised their transaction in mid-February of this year.
However, for this go-around, ACT II has reduced the purchase price by an aggregate of $70 million with a reduction in the base consideration to $415 million, down from $450 million. Furthermore, the share consideration was also reduced to $25 million, down from $60 million.
The amended transaction terms reflect a valuation of 7.9x pro forma adjusted 2020 EBITDA, compared to 8.5x under the transaction terms announced in February 2020. The transaction is now valued at approximately $516 million at closing, as compared to approximately $586 million in the agreement announced in February, 2020. However, February’s revisions had actually increased the multiple to 8.5x, up from the original 8.1x when this combination was announced in December 2019. (If you’re a subscriber, you can find all three sources and uses tables on Act II’s profile page.)
Additionally, the anticipated net leverage will decrease to 1.4x from 2.0x under the transaction terms announced in February 2020. And again, the original net leverage multiple was 3.0x.
Most importantly, Act II provides a new presentation that is chock full of updated information that address the Covid-19 crisis head-on. In fact, they provide updates to much of their information through the end of April 2020. As for current crisis, Act II has included a slide detailing their Covid-19 contingency planning as well as how they’ve been performing over the past four weeks. Which, as we know, has been extremely challenging. However, it looks like Whole Earth Brands is hanging in there pretty well, all things considered.
This was a well thought out update. And the re-struck deal, with improved net leverage, along with the fact that they previously announced they would be eliminating half of the dilution from their warrants (plus a $75 million PIPE), gives this company a much better profile. It still won’t be easy and they’ll have to hit the road hard (or at least the Zoom hard), but this is certainly an improvement.