Oxus Acquisition Corp. (NASDAQ:OXUS) has entered into a definitive agreement to combine with foodtech company Borealis at an enterprise value of $150 million.

Oakville, Ontario-based Borealis has developed a line of plant-based ramen noodle products, which it produces through a US-based manufacturing subsidiary.

The combined company is expected to trade on the Nasdaq once the deal is completed in the third quarter of 2023.

Transaction Overview

Oxus has an estimated $177 million in its current trust and has not yet supplemented this with additional committed financing.

The parties have not yet filed their merger documents or an investor presentation, but Oxus’ profile page will be updated once additional information is made available.

Quick Takes: Oxus has been an intriguing SPAC to watch over the past year.

Although the SPAC boom has primarily been an American phenomenon, plenty of international teams have gotten into the game. These have primarily come from global financial centers like London, Singapore and Hong Kong.

But, Oxus brings us filings datelined from Almaty, Kazakhstan as it is chaired and backed by Kazakh oligarch Kenges Rakishev. The SPAC’s search, as outlined in its initial S-1, was to find an energy transition company in the former Soviet space or South Asia. The initial rumors of where Oxus was looking aligned with this vision.

Last May, the SPAC was rumored to be courting Battery Metals Technologies (BMT), which operates a large nickel and cobalt mine near Kazakhstan’s border with China. BMT is wholly owned by one of Rakishev’s own companies, so the SPAC may have received pushback for what would have been something of an insider deal.

That said, recent SPAC history has shown that deals more often run into trouble due to unfamiliarity between the sides rather than the opposite. In fact, success stories like Archaea Energy, which sold to BP (NYSE:BP) for $26 per share after merging with a SPAC sponsored by its owner, have provided positive examples, as long as the target is solid enough.

Oxus also reportedly sniffed around fast-charging battery-maker StoreDot, which is owned by a private equity firm that Rakishev chairs. But, instead of diving into either of these targets, Oxus has gone in a radically different direction in choosing a Canadian CPG food company.

There could be many possible reasons for the distant departure from Oxus’ early hunting ground, but the simplest may be that the SPAC initially IPO’d in September 2021 in simpler geopolitical times.

Russia’s invasion of Ukraine a year ago today changed the math for Eastern European risk and what kinds of deals are going to face scrutiny. Like nearly all oligarchs in the region, Rakishev has developed at least some business ties to Russia over the years. He also has a close personal and business relationship with Chechen leader Ramzan Kadyrov who is actively leading units in the field in Ukraine, according to corruption-investigating NGO OCCRP.

Given all the heat on Russia at the moment, Rakishev may have wanted to avoid throwing his own assets on a US exchange or going through the regulatory scrutiny that a local company would have likely drawn. The SPAC may have also wanted to reassure investors that Oxus was playing it safe ahead of a February 28 special meeting to extend its deadline from March 8 to December 8.

Then again, CPG snacks and food de-SPACs are also flat outperforming many of their energy transition peers these days.

Borealis Foods produces packaged ramen noodles under the Chef Woo brands with about 16 flavors in circulation. All are made from fully plant-based ingredients and use organic pea proteins to provide 20 grams of protein and 15% of a person’s daily recommended iron intake from each bowl.

The company was founded in just 2019, but received an angel investment the following year from former long-time Nestle (SW:NESEN) exec Nandu Nandkishore followed by a Series A round of undisclosed size led by venture capital firms Cibus Fund and Rocana Ventures in December 2021, according to Pitchbook.

It followed this up by investing $50 million into South Carolina-based food processor Palmetto Foods in December 2022 in a move that brought the company under its wing as a subsidiary. As a pair, Borealis brings the food technology pieces tied to making the vegan, high-protein products, while Palmetto has the manufacturing capacity to produce 600 million ramen meals per year.

The parties do not make it clear in their materials, but it is possible Palmetto worked for Borealis as a co-packer to get the Chef Woo brands to market before last December and thus the deal was a step by Borealis to vertically integrate.

At any rate, they now together hope to increase their share of the estimated $40 billion annual ramen market. With better-for-you vegan offerings, Chef Woo is a somewhat unique brand in a category long defined by cheap bricks of noodles and high-sodium packs of flavoring. Chef Woo bowls sell for about $2 to $3 each, depending on quantity in the bulk pack.

As mentioned before, for a Kazakh SPAC, it’s not a terrible read on the market that in America, snacks may be the most risk-proof category out there. De-SPAC’d snack brands Hostess (NASDAQ:TWNK), Utz (NYSE:UTZ) and Simply Good Foods (NASDAQ:SMPL) last closed $24.78, $16.53 and $38.52, respectively, a few years out from closing their own deals.

ADVISORS

• Torys LLP (Canada) is acting as legal counsel to Oxus (US).
• Travers Thorp Alberga (Cayman Islands) is acting as legal counsel to Oxus (US).
• Greenberg Traurig, LLP is acting as legal counsel to Oxus (US).
• Nixon Peabody LLP (US) is acting as legal counsel to Borealis.
• Bennett Jones LLP (Canada) is acting as legal counsel to Borealis.