We've seen a surge in popularity in what's called a "Special Purpose Acquisition Company," or SPAC. Bloomberg had a good article this morning on advent of the SPAC and what's happening in the industry as a whole. These companies, also called blank-check companies, are IPO'd after raising their funds. Once public, the founding management team needs to make an acquisition in a given time-frame. Shareholders decide on an individual basis whether they like the deal or not. If they like it, great. If not, they tender their shares and receive their money back.
Essentially, it's a hedged bet on management that their industry expertise will lead to a smart acquisition.
Bloomberg says that since the start of 2003, 144 blank-check companies have sold shares, raising $18.1 billion, with 13 of the deals coming before 2005, according to SPAC Analytics.
Some upcoming SPACs:
Nelson Peltz, who's known for putting pressure on the managements of companies including ketchup-maker H.J. Heinz Co. (NYSE: HNZ) to improve shareholder value, is seeking $750 million for New York-based Trian Acquisition I Corp. The IPO is scheduled for Jan. 21. Peltz, 65, separately won clearance from regulators last week to buy a stake of New York-based insurance broker Marsh & McLennan Cos. (NYSE: MMC)
Bloomberg also mentions Ronald Perelman, the 65-year-old chairman of skin-care company Revlon Inc. (NYSE: REV) who has filed to raise $500 million for MAFS Acquisition Corp. The New York-based investor also brokers deals through his closely held holding company, MacAndrews & Forbes Holdings Inc., and M&F Worldwide Corp., which trades publicly.
Some SPACs of note:
GLG Partners (NYSE: GLG): the $528 million Freedom Acquisition Holdings Inc., took New York-based hedge-fund manager GLG Partners public on Nov. 2. GLG units rose 31 percent since the deal was announced in June.
Hicks Acquisition Company (AMEX: TOH) Thomas Hicks, the leveraged buyout pioneer and owner of the Texas Rangers of Major League Baseball, raised $552 million for Hicks Acquisition Co. I in September.
Jamba Juice (NASDAQ: JMBA): Services Acquisition Corp. International, sponsored by former Blockbuster Inc. Chief Executive Officer Steven Berrard, raised $138 million in June 2005 in an IPO underwritten by Broadband Capital Management LLC. In March 2006, the SPAC said it would buy juice-smoothie retailer Jamba Juice Co.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author holds no position in the stocks mentioned.
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Reader Comments (Page 1 of 1)
1-11-2008 @ 12:58AM
Mark said...
Jamba Juice has a P/E Ratio of 5.