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Union Acquisition Corporation II *

Union Acquisition Corporation II *

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Procaps Group

ENTERPRISE VALUE: $1.125 billion
ANTICIPATED SYMBOL: PROC

Union Acquisition Corporation II proposes to combine with Procaps Group, a leading integrated international healthcare and pharmaceutical company.

Founded in 1977, Procaps is a leading integrated international healthcare and pharmaceutical company with a successful history of growth and diversification.

  • Largest pharmaceutical integral CDMO (“iCDMO”) in Latin America and top 3 preferred supplier globally in terms of volume of softgel production capacity.
  • Proprietary portfolio of branded Rx and OTC products and services sold, distributed or provided to over 50 markets with a focus on differentiated, strong margin and high barrier to entry products.
  • Extensive scientific expertise and robust pipeline with more than 500 formulations, developing more than 50 products per year with in-house R&D.
  • Vertically and horizontally integrated to provide oral drug delivery technology and manufacturing capabilities at premium prices at competitive costs.
  • 6 state-of-the-art manufacturing facilities in Latin America including first FDA-approved pharmaceutical plant in South America for selling Rx products into the U.S.
  • Employs over 5,000 people across 13 countries with highly accomplished management team.
  • Over 30 patents granted (over 50 pending) and over 5,000 trademarks.

Business Units/Product Lines

  • Softigel – iCDMO services specializing in Soft Gelatin Capsules (SGC) and derivative technologies.
  • Farma – Formulates, manufactures and markets branded prescription drugs.
  • Clinical Specialties – Develops, manufactures and markets high-complexity drugs for hospital use.
  • VitalCare – Develops, manufactures and markets OTC consumer healthcare products.
  • Diabetrics – Provides integrated diabetes solutions.

SUBSEQUENT EVENT – 8-K Link

  • On September 29, 2021, Union, the Company, Holdco and Merger Sub entered into that certain Amendment No. 1 to Business Combination Agreement (the “Amendment to the BCA”), pursuant to which, among other things, Union, the Company, Holdco and Merger Sub agreed to:
    • (i) Reduce the number of redeemable B shares of Holdco, nominal value $0.01 per share (“Holdco Redeemable B Shares”) to be issued to International Finance Corporation (“IFC”) in the Exchange by 1,500,000 and increase the number of ordinary shares of Holdco, nominal value $0.01 per share (“Holdco Ordinary Shares”), to be issued to IFC in the Exchange by 1,500,000.
    • (ii) Increase the “SPAC Transaction Expenses Cap” to $16,650,000 and reduce the amount of minimum cash required of the Business Combination Agreement to be held by Union (either in or outside the Trust Account) at the closing of the Transactions, to $160,000,000.

TRANSACTION

  • Under the terms of the proposed transaction, Procaps Group’s shareholders will receive an aggregate of 97.1 million Procaps Ordinary Shares and, in addition to Procaps Ordinary Shares, IFC will receive 6 million redeemable B shares of the Company, in exchange for their existing Procaps Group ordinary shares.
  • All Procaps Group shareholders’ Procaps Ordinary Shares will be subject to a 6-month lock-up, with the exception of 4 million Procaps Ordinary Shares held by certain Procaps Group shareholders, which will be subject to a shorter lock-up expiring on the earlier to occur of the date that is 90 days from the date of the consummation of the business combination and the date which the last sale price of the Procaps Ordinary Shares equals or exceeds $12.00 per share for any 20 trading days within any 30-day trading period.
  • Of the Procaps Ordinary Shares issued to the Procaps Group shareholder in the exchange described above, 10,464,612 Procaps Ordinary Shares will be placed into an escrow account at closing of the transaction (the “Procaps Escrowed Shares”). 50% of the Procaps Escrowed Shares will be released to Procaps Group’s shareholders if the last sale price of the Procaps Ordinary Shares equals or exceeds $12.50 per share for any 20 trading days within any 30-day trading period and the remaining 50% will be released to Procaps Group’s shareholders if the last sale price of the Procaps Ordinary Shares equals or exceeds $13.00 per share for any 20 trading days within any 30-day trading period.
  • As part of the transaction, LATN’s founders have agreed to forfeit 2,875,000 of their private warrants. LATN’s founders have also agreed to place 2,875,000 of the private warrants of the Combined Company they will receive in the business combination and 1,250,000 Procaps Ordinary Shares into an escrow account (together with the Procaps Ordinary Shares issuable upon exercise of the escrowed private warrants, the “LATN Escrowed Shares”). 50% of the escrowed warrants and 50% of LATN Escrowed Shares will be released to LATN’s founder if the last sale price of the Procaps Ordinary Shares equals or exceeds $12.50 per share for any 20 trading days within any 30-day trading period, and the remaining 50% of the escrowed warrants and LATN Escrowed Shares will be released to the LATN founders if the last sale price of the Procaps Ordinary Shares equals or exceeds $13.00 per share for any 20 trading days within any 30-day trading period. For the avoidance of doubt, any Procaps Ordinary Shares released from escrow will remain subject to any applicable lock-up. The owners of the Procaps Escrowed Shares and the LATN Escrowed Shares (together, the “Escrowed Shares”) will retain their economic interests (such as rights to cash dividends, if any) in, and be able to vote, such Escrowed Shares while they remain in escrow.
  • The Combined Company is expected to receive gross proceeds of approximately $300 million at the closing of the transaction assuming no redemptions by LATN’s shareholders. Net proceeds to the Combined Company are expected to be approximately $215 million after transaction-related expenses and the redemption of the 6 million redeemable B shares of the Company held by IFC for a total cash payment of $60 million. Use of net proceeds would be to fund organic growth and consummate accretive acquisitions.
  • In addition to the $200 million held in LATN’s trust account (assuming no redemptions by LATN’s shareholders), an additional group of top-tier healthcare investors has committed to participate in the transaction through an ordinary share PIPE of $100 million at $10 per share. As noted, this transaction represents the first ever Latin American focused SPAC to include a fully committed and over-subscribed SPAC-related ordinary share PIPE.
  • Transaction value will be 10.75x EV/2021E Adjusted EBITDA, implying an estimated pro forma enterprise valuation of US$ 1.1 billion based on an estimated Adjusted EBITDA for 2021 of $105 million and excluding the Escrowed Shares.
  • Post-transaction pro forma Net Debt/Adjusted EBITDA reduced from 2X 2020 to minimal net debt 2021, assuming no redemptions and excluding the Escrowed Shares.
  • As part of the transaction, the Procaps Group’s current management and existing equity holders will roll nearly 100% of their equity into the Combined Company. All shareholders from the families will not have any secondary redemptions from the gross proceeds received. The transaction is expected to close in the third quarter of 2021.

LATN trans overview


PIPE

  • $100 million
    • 10,000,000 SPAC Ordinary Shares, for a purchase price of $10.00 per SPAC Ordinary Share and an aggregate purchase price of $100,000,000 (the “PIPE Investment”), which will automatically be converted.

SPONSOR AGREEMENT

  • LATN’s founders have agreed to forfeit 2,875,000 of their private warrants.
  • LATN’s founders have also agreed to place 2,875,000 of the private warrants of the Combined Company they will receive in the business combination and 1,250,000 Procaps Ordinary Shares into an escrow account.
    • 50% of the escrowed warrants and 50% of LATN Escrowed Shares will be released to LATN’s founder if the last sale price of the Procaps Ordinary Shares equals or exceeds $12.50 per share for any 20 trading days within any 30-day trading period
    • The remaining 50% of the escrowed warrants and LATN Escrowed Shares will be released to the LATN founders if the last sale price of the Procaps Ordinary Shares equals or exceeds $13.00 per share for any 20 trading days within any 30-day trading period.
  • For the avoidance of doubt, any Procaps Ordinary Shares released from escrow will remain subject to any applicable lock-up.
  • The owners of the Procaps Escrowed Shares and the LATN Escrowed Shares (together, the “Escrowed Shares”) will retain their economic interests (such as rights to cash dividends, if any) in, and be able to vote, such Escrowed Shares while they remain in escrow.

LOCK-UP

  • All Procaps Group shareholders’ Procaps Ordinary Shares will be subject to a 6-month lock-up, with the exception of 4 million Procaps Ordinary Shares held by certain Procaps Group shareholders, which will be subject to a shorter lock-up expiring on the earlier to occur of the date that is 90 days from the date of the consummation of the business combination and the date which the last sale price of the Procaps Ordinary Shares equals or exceeds $12.00 per share for any 20 trading days within any 30-day trading period.

NOTABLE CONDITIONS TO CLOSING

  • On September 29, 2021, Union, the Company, Holdco and Merger Sub entered into that certain Amendment No. 1 to Business Combination Agreement (the “Amendment to the BCA”), pursuant to which, among other things, Union, the Company, Holdco and Merger Sub agreed to reduce the amount of minimum cash required of the Business Combination Agreement to be held by Union (either in or outside the Trust Account) at the closing of the Transactions, to $160,000,000.
  • After giving effect to the exercise of the Redemption Rights by holders of SPAC Ordinary Shares and SPAC Warrants and payments related thereto, Union II will have at least an aggregate of $185,000,000 of cash held either in or outside the Trust Account, including the aggregate amount of the PIPE Investment Amount.

NOTABLE CONDITIONS TO TERMINATION

  • The Business Combination Agreement may be terminated and the Transactions may be abandoned by either Registrant or the Company if the Merger Effective Time shall not have occurred prior to 5:00 p.m. (New York time) on October 15, 2021

ADVISORS

  • BTG Pactual acted as sole placement agent on the PIPE and financial advisor to LATN.
  • Cantor Fitzgerald acted as capital markets advisor to LATN.
  • Greenhill & Co., LLC acted as financial and capital markets advisor to Procaps Group.
  • Linklaters LLP acted as legal counsel to LATN.
  • Greenberg Traurig, LLP acted as legal counsel to Procaps Group.

MANAGEMENT & BOARD


Executive Officers

Kyle P. Bransfield, 35
Chief Executive Officer & Director

Mr. Bransfield previously served as director of Union I since November 2017 and served as its Chief Executive Officer from December 2017 until it completed its merger with Bioceres in March 2019. Mr. Bransfield currently serves on the board of the resulting entity, Bioceres Crop Solutions (NYSE American: BIOX), and sits on the audit, compensation, and nominating and governance committees). Mr. Bransfield is a Partner of Atlantic-Pacific Capital and has led the firm’s global direct private placement and structured investment activities since 2015. Mr. Bransfield has over 12 years of experience in direct equity and debt private markets principal investing, capital raising, and investment banking. Prior to joining Atlantic-Pacific, Mr. Bransfield was an investment banker in Sagent Advisors’ Private Financing Solutions Group from 2014 to 2015. Prior to Sagent, Mr. Bransfield spent five years from 2009 to 2014 as a Principal and General Partner at CS Capital Partners, a Philadelphia-based multi-family office focused on alternative investments. In his role there, he co-managed a portfolio of direct investments, served as an observer to several boards of directors, and fulfilled operating roles within portfolio companies. In 2006, Mr. Bransfield began his career in the Mergers & Acquisitions Group at Stifel Nicolaus Weisel. Mr. Bransfield received a B.S. in Business Administration from American University.


Daniel W. Fink, 42
Chief Operating Officer & Director

Mr. Fink previously served as a director of Union I from December 2017 until it completed its merger with Bioceres in March 2019. Mr. Fink has been a Partner at PTW Capital, an investment firm, since March 2017, and the Managing Principal at Blue Moose of Boulder, an emerging natural foods company, since October 2015. Mr. Fink has spent the majority of his career in investment banking and private equity, including working at Morgan Stanley from 1999 to 2001, J.W. Childs Associates, L.P. from 2001 to 2007, Stone Tower Equity Partners from 2007 to 2008 and Centerview Capital from 2009 to 2013. From April 2013 to March 2015, Mr. Fink was at Bacardi Limited where he served as Vice President of Finance/Business Planning. Over the course of his career, Mr. Fink has helped to build or revitalize some highly recognized brands in the consumer industry. Mr. Fink received a BA in Economics from Yale University and an MBA from Harvard Business School.


 

Board of Directors

Juan Sartori, 38
Non-Executive Chairman of the Board

Mr. Sartor previously served as Chairman of the Board of Union I from November 2017 until it completed its merger with Bioceres in March 2019. Mr. Sartori is the Chairman and founder of Union Group International Holdings Ltd. (Union Group), a privately owned investment and private equity management firm with significant strategic Latin American interests. These cover the agricultural, energy, forestry, infrastructure, minerals, oil & gas and real estate sectors. Mr. Sartori established Union Group in 2007. In 2008, he formed Union Agriculture Group (BVM: UAGR), one of the first companies affiliated with Union Group to consolidate agricultural assets. UAGR has grown to become the largest agricultural company in Uruguay, and one of the biggest in Latin America, with a subsidiary listed on the Montevideo Stock Exchange. Since its incorporation, Union Group and its subsidiaries have performed numerous transactions across Latin America, growing its portfolio of businesses of private and public companies. Mr. Sartori is a regular speaker about Latin American issues in worldwide conferences and media. Mr. Sartori began his career as a financial services entrepreneur in 2002 launching Union Capital Group, a Geneva based multi-strategy asset manager, selling its control in 2008. Mr. Sartori was a candidate in the 2019 Uruguayan Presidential elections under the National Party, and placed second in the primary with 23% of the party’s vote. Mr. Sartori received a Bachelor Degree in Business and Economics from École des Hautes Études Commerciales de Lausanne.


Gerald W. Haddock, 71
Director

Mr. Haddock previously served as a director of Union I from December 2017 until it completed its merger with Bioceres in March 2019. Mr. Haddock founded Haddock Enterprises, LLC in 2000 and has served as its President since such time. Haddock Enterprises is an entrepreneurial development company concentrating on private investments and transactions, including oil and gas and real estate, located in Fort Worth, Texas. Mr. Haddock formerly served as President and Chief Operating Officer of Crescent Real Estate Equities Company, a diversified real estate investment trust, from 1994 to 1999. Mr. Haddock served as a director of Valaris plc (formerly ENSCO International, Plc.) (NYSE: VAL), a leading global offshore oil and gas drilling service company, from 1986 until May 2019. He has also served as a director of Meritage Homes Corporation (NYSE: MTH), a real estate development company that constructs single-family detached homes across the United States as well as active adult communities and luxury real estate in Arizona, since 2005 and has served as Chairman of the Nominating and Corporate Governance Committee since 2006 and served as a member of the Audit Committee from 2009 to 2018. Mr. Haddock is a former board member of Cano Petroleum, Inc., having served from December 2004 to October 2008. He also serves on the board of trustees and is a member of various committees for the Executive Investment Committee at Baylor University, the M.D. Anderson Proton Therapy Education and Research Foundation, the CEELI Institute and the Johnny Unitas Golden Arm Educational Foundation. Mr. Haddock received his Bachelor’s Degree in Business Administration from Baylor University and his J.D. from Baylor University Law School. He also has received a Masters of Law in Taxation degree from New York University School of Law and a MBA from Dallas Baptist University.


Joseph J. Schena, 60
Director

Mr. Schena previously served as a director of Union I from December 2017 until it completed its merger with Bioceres in March 2019. Mr. Schena has served as a principal and co-founder of PTW Capital since June 2017. Mr. Schena served as the Chief of Staff at Cohen Enterprises focused on C&S Wholesale Grocers and Warehouse Technologies from November 2015 until April 2019. Previously, Mr. Schena served as Chief Financial Officer and Executive Vice President at C&S Wholesale Grocers. Prior to C&S Mr. Schena was Chief Financial Officer of Bacardi Limited from October 2012 to September 2014. Previously, Mr. Schena served as an Operating Partner at Centerview Capital from 2007 to 2012 and was involved in the $5.5 billion privatization of Del Monte Foods and the acquisition of Richelieu Foods. Prior to Centerview Capital, Mr. Schena served in various senior financial positions at Gillette from 2001 to 2007 where he was Chief Financial Officer of the Gillette business unit after the sale to P&G and Kraft/Nabisco from 1980 to 2000. Mr. Schena currently serves as a director of Warehouse Technologies, an automated warehousing company located in Wilmington, MA. He also serves as a director of Conyers Park II Acquisition Corp., a blank check company seeking to consummate an initial business combination with a target business in the consumer sector. Mr. Schena received an MBA in Finance and a BBA in Accounting from Iona College.


Federico Trucco, Ph.D.
Strategic Advisor

Mr. Trucco has served as Chief Executive Officer of Bioceres Crop Solutions Corp. (NYSE American: BIOX), a fully-integrated provider of crop productivity solutions, including seeds, seed traits, seed treatments, biologicals, high-value adjuvants and fertilizers, since June 2011 and was appointed as a member of its controlling shareholder, board of directors in December 2014. He previously served in various positions at INDEAR including as general manager from 2009 to 2011, director of product development from 2008 to 2009 and research team leader of the Amaranth project from 2005 to 2009. Dr. Trucco also serves as president of Bioceres, Inc. and S&W Semillas, manager of Verdeca, a director of RASA Holding, Heritas and Rizobacter Argentina, and vice president of SEMYA and AGBM.


Brady Dougan
Strategic Advisor

Mr. Dougan is Founder and Chief Executive Officer of Exos Technology Financial Partners (Exos). Prior to founding Exos, Mr. Dougan worked at Credit Suisse for 25 years, and served as Chief Executive Officer from 2007 to 2015. In addition to his role as CEO, Mr. Dougan held roles at Credit Suisse across a variety of business lines and geographies. Mr. Dougan has been a Member of The Board of Directors of Humacyte Inc., since 2005. He previously served as a Director of Credit Suisse Securities (Europe) Limited, Credit Suisse International (formerly known as Credit Suisse First Boston International) and Harrisdirect LLC.


Laurence Bodner
Strategic Advisor

Mr. Bodner has served as the Chief Financial Officer of Sovos Brands, a food and beverage company seeking to acquire brands, since February 2017. From March 2016 to February 2017, Mr. Bodner served as a Senior Advisor at Advent International in its global retail, consumer and leisure team. Mr. Bodner served as Executive Vice President, Chief Financial Officer and Treasurer of Big Heart Pet Brands (formerly Del Monte Foods) from 2011 through July 2015. He joined Del Monte Foods in 2003 and served the company for 12 years in increasing levels of responsibility across the Finance and Operations functions. Prior to Del Monte Foods, Mr. Bodner also held senior financial positions at Walt Disney Company, as well as The Procter & Gamble Company. Mr. Bodner served on the board of directors of Hearthside Foods, a leading bakery, snack and customized solutions contract manufacturer for packaged food products in North America and Europe, from April 2015 to May 2018. He currently serves on the board of directors of Hostess Brands, Inc.