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SPAC Weekly 8/31: Special Purpose Acquisition Corps 101

SPAC Weekly 8/31: Special Purpose Acquisition Corps 101 by Troy Marchand, Foundry Capital

The third edition of SPAC Weekly, an offering of, for the week of August 31st.

New SPAC Announced:

First up this week is a newly announced SPAC, which filed on 9/17/2015. Pacific Special Acquisition Corp (PAACU) announced that it completed an IPO of $50 million. The Company is a British Virgin Islands exempted company, operating out of The People’s Republic of China. EarlyBirdCapital is the sole underwriter on the deal. I am always skeptical about Chinese securities, but that has no bearing on this deal directly.

Terms of the new unit will consist of one common share, one right to own one-tenth of a common share after a merger is completed, and one warrant worth a half of a common share. Two warrants will allow the purchase of a full share for $12 each. The SPAC will target a Chinese company with an enterprise value of between $200 and $300 million. The Chairman of the SPAC, also a director of Pacific Securities is Jian Tu. Previously he served as general counsel for the Shanghai Stock Exchange, and has held director roles for several public companies.

Pacific Securities, the sponsor of the SPAC is a $5.3 billion market capitalization company with offices in China and Laos providing investment services.

Recently Announced Deal:

Garnero Group Acquisition Corp (GGAC) announced a proposed merger with Grupo Columbo, one of the largest Brazilian men’s clothing retailers. The offer is for roughly $60 million in stock with plans to raise another $100 million in a private placement. Levy Acquisition did something similar with a private placement when they merged with Del Taco (TACO). At first glance, this looks like a good deal and one worth digging deeper. This proposed merger is a much-improved deal than Garnero Group’s proposed merger earlier this year with a cyber security company pre-revenue. This deal seems to have much greater odds of being approved and seems like they are acquiring a good business...