Merger Monday has been overrun by SPACs

SPAC merger activity hasn’t peaked. If anything, it’s just getting started.

Five companies this morning announced plans to go public via reverse mergers with SPACs, at an aggregate market value of more than $15 billion. And there might be even more by the time you read this.

The bottom line: SPAC merger activity hasn’t peaked. If anything, it’s just getting started.

Driving the news:

  • Alight, a Blackstone Group-backed benefits services provider, for $7.3 billion by a Bill Foley-led SPAC.
  • The Hillman Group, a home improvement hardware maker owned by CCMP Capital, for $2.6 billion to a SPAC led by Tilman Fertitta and Rich Handler.
  • Taboola, a VC-backed content recommendation company, for $2.6 billion by a Gilad Shany-led SPAC.
  • Latch, a VC-backed smart lock startup, for $1.56 billion by a SPAC formed by Tishman Speyer Properties.
  • Sunlight Financial, a private equity-backed residential solar financing platform, for $1.3 billion by a SPAC formed by Apollo Global Management.

Coming attractions: More SPAC merger announcements are anticipated shortly, including deals in the EV, ed-tech and aerospace sectors.

What’s happening: A lot of this can just be chalked up to supply and demand, the predictable consequence of surging private funding flows and a record amount of new SPAC issuance.

  • I’m also hearing an argument that private market investors, and their portfolio companies, are increasingly worried about a valuation bubble. SPACs provide a quicker route to listing than do traditional IPOs, thus lowering the risk of finding themselves on the wrong side of a pop or deflation.
  • The counterargument is that SPACs aren’t quite as fast as they’re sometimes made out to be. In the case of Alight, for example, a source tells me that Blackstone began talking to Bill Foley last August, with serious negotiations beginning a couple of months ago. Today’s announced deal does have committed PIPE financing, but still requires a SPAC shareholder vote and isn’t slated to close until sometime in Q2.

Dan Primack

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