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Top 3 SPAC Targets – $10+ Billion Enterprise Value
by Nicholas Alan Clayton on 2022-01-21 at 7:59am

SPACInsider contributors Anthony Sozzi and Sam Beattie this week compiled their three favorite potential SPAC targets among companies with enterprises values of $10 billion or larger. We look at why they are compelling and why each could be a fit for a blank-check merger.

With the Nasdaq officially in a correction, SPACs can likely expect that a rebound will now take some time, particularly in the tech sector. But, as was pointed out in detail in this week’s SPACInsider Newsletter, the pain is being felt similarly across both de-SPACs and IPOs.

With that in mind, it may be time to turn to the broader tendencies at play in the market. One of the more obvious ones is that bigger deals tend to do better in their early years than smaller ones. That’s already been true this year with TPG (NASDAQ:TPG) and its $10.4 billion market cap among the only 2022 IPOs currently trading near or above their initial offering prices.

Among de-SPACs, the 10 companies that had the largest pro forma enterprise values at the time of their deals (all of which were completed in the past two years) closed Thursday with an average price of $10.35. Lucid (NASDAQ:LCID) and its closing price of $39.50 is doing a lot of work in this average, but if you separate it from the group as well as Paysafe (NYSE:PSFE), the cohort’s lowest performer Thursday, the remaining eight big dogs still average out at $7.53.

This isn’t ideal, but is far from catastrophic in the current market. After all, companies like Rent-the-Runway (Nasdaq:RENT) and Oscar Health (NYSE:OSCR) wish they were down just 25% from their November 1 price. Currently, RENT and OSCR are down -73% and -83% from their issuance prices, respectively.

Meanwhile, of the 376 SPAC transactions completed dating back to 2010, two of the top 10 best price performers at the moment are also among the 20 largest de-SPACs of all time – Lucid and Vertiv (NYSE:VRT). Nothing is a guarantee, but there is enough evidence there that even teams with well under $1 billion in trust may consider getting out their elephant guns in the current market.


Ever since acquisition talks foundered between Discord and Microsoft (NASDAQ:MSFT) last April, there have been suspicions that the social network had instead switched track to an IPO. As things stand now, it will likely be a full year or more from the end of those discussions for the IPO market to be favorable for Discord to take that step in the regular way.

After all, the last major social network to go public, Snap (NYSE:SNAP) is down over 50% since late October. Meanwhile, the two best trading SPACs with announced deals – Digital World (NASDAQ:DWAC) and CF VI (NASDAQ:CFVI)) – are the two that inked definitive agreements with newer social media platforms. There’s a clear caveat with both of these in that they are that platforms that promise to be havens for conservative speech and are propelled by the zeitgeist surrounding former President Donald Trump.

Discord has its own dedicated fan base, however, starting as it did as a platform primarily used by gamer communities. There is not insignificant overlap between those groups and those interested in retail investing so Discord could expect at least some of the same buzz.

The company’s valuation reportedly bumped up to $14.2 billion in a September 2021 capital raise after turning down the $12 billion bid from Microsoft. This round was led by SPAC-backer Dragoneer Investment Group and included participation by frequent PIPE participants Fidelity and Franklin Templeton.

If it were to complete a SPAC deal at roughly this valuation, it would be the fourth-largest such deal in history although two currently pending deals would top it (Lionheart II’s (NASDAQ:LCAP) $32 billion deal with MSP Recovery and Gores Guggenheim’s (NASDAQ:GGPI) tie-up with Polestar).


If ever the were a market for going after staples rather than space, this is one, but similarly to Discord, Wawa has a fanbase of its own. The Mid-Atlantic chain of convenience stores (c-stores) and grocers inspires a cult following in the region and as a long-established business, it would presumably not be too hard to get institutional PIPE investors on board.

It is the 29th largest private company in the US by revenue, with $11 billion notched in 2020 derived from its roughly 950 locations. This also makes it the 10th largest c-store chain in the country and a public listing could help it consolidate that fragmented space.

C-store operator Arko Corp. (NASDAQ:ARKO) has traded reasonably well since closing its combination with Haymaker II in December 2020, closing Thursday at $8.14. More recently, USHG Acquisition Corp. (NYSE:HUGS), which announced a combination with Panera Brands in November, finished Thursday at $10.25, making it the seventh-highest performer among SPACs with announced deals.

The only big question is whether Wawa would be motivated to sell. It has been family-run throughout its history, but some observers interpreted its 2014 transition from a C-corp to S-corp paired with a consolidation of employee-held stock as a prelude to a major liquidity event. Six years on, that still hasn’t materialized, but the estimated value of its private stock has grown in estimated value from about $2,296 per share in 2009 to over $14,000 in 2020.

Among SPACs searching specifically in the consumer space, KKR I (NYSE:KAHC) is the one wielding the elephant gun with a $1.38 billion trust. It could potentially bring synergies from across its sponsor’s portfolio, which includes foodservice distributor US Foods (NYSE:USFD) as well as a variety of consumer products brands.


But, even in this market, there are tech plays large enough to turn heads and cut through the present noise.

San Francisco-based Airtable doesn’t need pure cash having raised $735 million in a December Series F that more than doubled its valuation in a single year to $11 billion. But, while this raise may have been designed to give it flexibility with a potential IPO timeline, a SPAC deal could allow it to have its cake and eat it too.

The company has developed a platform making software design far more approachable and executable across teams. These low-code tools are designed to help organizations get software work done even if they don’t necessarily have a roster full of Java-fluent developers. Nonetheless, it is still used by about 80 of the Fortune 100, including tech giants like Amazon (NASDAQ:AMZN), IBM (NYSE:IBM) and Netflix (NASDAQ:NFLX).

In this highly competitive space, there is likely has no limit to the amount of capital AirTable could invest into R&D. So, if it would rather go full bore into growth rather than see its war chest slowly burn away while waiting for the right IPO window, it may prefer to pick up the surely numerous SPACs on line 3.

But, especially if it feels it doesn’t need the money, then it will take a solid SPAC team to make the case. For that reason, the recently IPO’d Screaming Eagle (NASDAQ:SCRM) may be the best team to make the case. AirTable CEO Howie Liu came up through Salesforce (NYSE:CRM) and, like Salesforce, AirTable seems like the kind of business that nearly every major company will have some kind of relationship with in the not-too-distant future.

That sort of bold vision fits the Eagle team, which itself brings the pedigree of seven completed SPAC transactions including the deal that played a major role in kicking of the 2020 SPAC market in DraftKings (NASDAQ:DKNG).

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