Two Former SPACs Heat Up the M&A Market
by Kristi Marvin on 2022-07-25 at 10:57am


Ginkgo Bioworks Inc. (NYSE: DNA), the cell programming company which previously combined with Soaring Eagle Acquisition Corp. in September of 2021, announced this morning that it would be buying the biotech company Zymergen (Nasdaq: ZY), in an all-stock transaction.

Ginkgo will be acquiring Zymergen at a fixed exchange ratio of 0.9179 Ginkgo shares for each Zymergen share, which puts the value of ZY at approximately $2.85 per share.

What’s probably most interesting to SPAC investors is that while Ginkgo is a former SPAC, Zymergen came public via a $500 million traditional IPO in April of 2021, at a price of $31.00. Zymergen’s announced acquisition price today of $2.85/share represents a value -91% lower than ZY’s IPO offer price.

But, Zymergen had a pretty storied and grim start to public company status from the get-go. Just three months after going public, ZY announced severe cutbacks in its commercial pipeline virtually wiping out any chance of generating revenue in 2021. At that point, the share price tumbled 75% and the founder and CEO stepped down. Keep in mind that this was a traditional IPO that was sold based on its commercial pipeline.

So to have a SPAC buying a traditional IPO on the cheap after said traditional IPO failed to execute on what it sold during its roadshow, completely turns the current narrative about SPACs on its head.

In other SPAC news, Infrastructure and Energy Alternatives Inc. (Nasdaq: IEA), another former SPAC that combined with M III Acquisition Corp. in March of 2018, announced that it will be acquired by MasTec (NYSE: MTZ), a leading infrastructure construction company, for approximately $14.00 per share, a 40% premium to M III’s IPO price of $10.00.

IEA is a services provider in renewable energy and infrastructure solutions with extensive expertise and capabilities spanning engineering, procurement, construction and other related services. M III, originally raised $150 million at its July 2016 IPO and announced its combination with IEA in 2017 with an implied enterprise value at that time of $293 million.

Both deals today paint a different picture than what’s usually portrayed in the press. Namely, that not every traditional IPO is a success; not every SPAC is a failure. And, even without using projections in a traditional IPO, there is no guarantee the company is accurately portraying its commercial viability.

And lastly, perhaps the recent volatility that has inhibited IPO activity ramps up the M&A market as the macro-economic backdrop moderates. After all, lots of good bargains out there…


Recent Posts
by Marlena Haddad on 2023-11-28 at 10:03am

Plum Acquisition Corp. I (NASDAQ:PLMI) has entered into a definitive agreement to combine with digital transformation company Veea for a total enterprise value of approximately $281 million. New York City-based Veea aims to simplify secure edge computing by improving application responsiveness, reducing bandwidth and data transport costs, and eliminating central cloud dependency. The parties expect the transaction to be...

by Nicholas Alan Clayton on 2023-11-28 at 8:43am

L Catterton Asia (NASDAQ:LCAA) announced this morning that it has upsized the committed financing in its combination with EV sports car maker Lotus to $870 million in total. The latest fuel injection comes in the form of $750 million in convertible notes and PIPE commitments under so far undisclosed terms. Counted purely as a PIPE,...

by Nicholas Alan Clayton on 2023-11-28 at 7:43am

At the SPAC of Dawn SPAC closing timelines can always be somewhat unpredictable, but PROOF I (NYSE:PACI) has the opportunity today to vie for a recent speed record today. It announced a combination with private aviation firm Volato 118 days ago on August 2 and its shareholders are set to vote to approve the combination...

by Marlena Haddad on 2023-11-27 at 1:21pm

Dune Acquisition Corporation (NASDAQ:DUNE) announced in an 8-K today that it has once again modified its agreement with sustainable energy firm Global Hydrogen. This amendment marks a reduction in Global Hydrogen’s equity value from $48 million to $43 million, alongside an increase in the available shares of common stock that is for the Global Gas Corporation...

by Nicholas Alan Clayton on 2023-11-27 at 7:43am

At the SPAC of Dawn After mixed signals for the consumer sector earlier this month, initial Black Friday sales numbers have shown that Americans were not too stuffed for a shopping spree this year. Shoppers bagged between $9.8 billion and $10 billion in goods online, depending on one’s preferred source, either of which would be...


Copyright © 2023 SPACInsider, Inc. All Rights Reserved