4 SPAC Mergers Worth $16 Billion Were Announced on Wednesday. What You Need to Know.
Traders at the New York Stock Exchange.
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Another day, another flood of start-ups going public via mergers with blank-check companies.
An electric air taxi company, an AI-powered robotics firm, a 3D-printing start-up, and an Indian wind and solar energy utility all announced transactions with special purpose acquisition companies, or SPACs, on Wednesday morning. The deals are set to bring some $16 billion worth of new companies public. All are in some of the trendiest and most futuristic pockets of the market, and they expect to have about $800 million in combined revenue this year.
The highest-value deal announced on Wednesday is a $6.6 billion combination of Joby Aviation with Reinvent Technology Partners (ticker: RTP). The SPAC is backed by LinkedIn co-founder-turned-venture-capitalist Reid Hoffman and Zynga founder Mark Pincus.
Joby has been developing a battery-electric air taxi for the past decade, and sees a future in which commuters will glide above gridlocked car traffic for the price of an Uber Black but in a fraction of the time. Its six-rotor, four-passenger electric vertical takeoff and landing, or eVTOL, aircraft has a range of up to 150 miles and can go 200 miles an hour.
Joby plans to launch its first air taxi service in a to-be-determined U.S. city in 2024, and expects to have almost 1,000 aircraft in service in three markets by 2026. Management forecasts $2.1 billion in revenue and $824 million in adjusted Ebitda—or earnings before interest, taxes, depreciation, and amortization—that year.
The merger with Reinvent Technology Partners will provide Joby with about $1.5 billion in cash to fund future development, including $690 million from the SPAC’s trust and an $835 million private investment in public equity, or PIPE, from institutional investors including BlackRock, Fidelity, and Baillie Gifford. Joby’s existing strategic investors include Toyota Motor (TM), which will help with eVTOL manufacturing, and Uber Technologies (UBER), which sold its competing Uber Elevate business to Joby last month and will offer its flights in its app in the future.
Management expects the merger to close by the end of the second quarter, when Reinvent Technology Partners stock will convert to shares in Joby under a to-be-determined ticker. The SPAC’s stock added 4.5% on Wednesday, to $13.52. That values Joby at about $8.9 billion, based on the 660 million shares to be outstanding after the deal closes.
Also Wednesday morning, ReNew Power—which says it is India’s largest pure-play renewable-energy producer—announced plans to merge with RMG Acquisition II (RMGB). The deal values ReNew’s equity at $4.4 billion, or an enterprise value of close to $8 billion. Management expects it to close in the second quarter, when RMG II’s ticker will change to “RNW.”
ReNew says it currently has over five gigawatts of capacity, about evenly split between wind and solar, and expects to reach 18.5 gigawatts in its fiscal 2025, which ends in March. The company sees big growth in Indian renewable-power demand ahead. The government has a target of reaching 450 gigawatts of renewable-energy generation in the next decade, about five times today’s installed capacity.
ReNew earned $578 million in Ebitda on $699 million in revenue in its latest fiscal year, which it sees growing to $2 billion and $1.7 billion, respectively, in four years. Those are wide profit margins. The deal with RMG II—whose sponsors brought Romeo Power (RMO) public late last year—will provide ReNew with $345 million from the SPAC’s trust and $855 million from a PIPE by investors including BlackRock and Chamath Palihapitiya. Some $500 million of that will go to buying out existing shareholders, with the rest going to ReNew’s balance sheet. Current investors, including Goldman Sachs, the Canada Pension Plan Investment Board, and the Abu Dhabi Investment Authority, will own about 70% of the postmerger company.
RMG II stock was up 4.3%, to about $11.60, on Wednesday, implying a market value of $5.1 billion based on 437 million postmerger shares.
The next SPAC deal announced Wednesday is all about robot arms. Specifically, AI-enabled robot arms with suction cups at the end of them for use in automated warehouses for picking, packing, shipping, and order fulfillment. Bedford, Mass.-based Berkshire Grey was founded in 2013 by its current CEO Tom Wagner, who formerly served as chief technology officer at iRobot (IRBT). It plans to merge with Revolution Acceleration Acquisition (RAAC) at an equity value of about $2.7 billion.
The thesis is that e-commerce is exploding, and Amazon.com (AMZN) is setting the pace in the industry with one-day shipping and an endless selection of products. Amazon already has dozens of warehouses buzzing with robots, and Berkshire Grey aims to be the arms dealer to other retailers hoping to keep up with Amazon. The company estimates just 5% of warehouses are currently automated. Berkshire Grey counts Walmart (WMT), FedEx (FDX), Target (TGT), and TJX Cos. (TJX) among its existing customers, and says it has a pipeline of accounts worth $1.7 billion over the coming five years.
The merger with RAAC—which is backed by former congressman and presidential candidate John Delaney and former AOL CEO Steve Case —will provide Berkshire Grey with $188 million in cash from its trust, plus $165 million from a PIPE funded by investors including BlackRock and Palihapitiya. The company’s existing investors include Khosla Ventures and SoftBank Group.
Berkshire Grey expects to have $927 million in revenue and $232 million in adjusted Ebitda in 2025. The deal is expected to close in the second quarter. RAAC stock was up 15% on Wednesday, to about $12.55, which would give Berkshire Grey a market value of $3.4 billion based on 274 million shares outstanding after the merger.
Finally, Wednesday also saw a $2.1 billion deal announced in the 3-D printing space between Markforged and a SPAC simply called one (AONE). Markforged’s additive manufacturing platform—called the Digital Forge—can print in metals like steel or copper and composites like carbon fiber or Kevlar. The company says its products are already in use in 10,000 facilities in 70 countries. It expects the additive manufacturing industry to grow from $18 billion in 2021 to $118 billion in 2029.
That could boost Markforged’s revenue from $88 million this year to $706 million in four years, when it will be in 100,000 facilities worldwide, the company forecasts. It also expects $172 million in 2025 adjusted Ebitda. Desktop Metal (DM), another 3-D printing start-up, also took the SPAC route to going public late last year.
The merger with one will provide Markforged with $215 million in cash from the SPAC’s trust and $210 million from a PIPE including Baron Capital Group, BlackRock, and Wellington Management. Existing investors include Microsoft’s venture fund and auto maker Porsche.
The transaction is expected to close this summer, when one’s ticker symbol will convert to “MKFG.” One stock was up 13.7% on Wednesday, to $12.85. With 206 million postmerger shares outstanding, which implies a market value of $2.6 billion for Markforged.
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