This week has seen a wealth of substantial transactions as advisers strive to capitalise on opportunities presented by the coronavirus business environment.
The most eye-catching have been the £3bn sale of Kazakhstan-based and London-listed copper company KAZ Minerals to Nova Resources and special purpose acquisition company (SPAC) dMY Technology Group Inc II on its agreement to merge with UK-based Genius Sports Group (GSG).
The latter deal sees the New York Stock Exchange-listed SPAC combine with GSG, a data and technology company for the sports, betting and media industries, for an implied equity valuation of £1.5bn.
GSG and dMY II shareholders will exchange their respective shares for shares in a new combined company, NewCo, which will be publicly listed on the NYSE. The deal also involves a group of institutional and experienced industry investors committing to participate via a common stock private investment in public equity (PIPE) financing of roughly $330m at $10 a share.
The combined company is expected to have around $150m of growth capital and a largely debt-free balance sheet to accelerate expansion through organic growth and strategic acquisitions.
Kirkland & Ellis advised Genius Sports, with a transatlantic team including New York partners Edward Lee, Abhishek Kolay and Srinivas Kaushik, London partners Rory Mullarkey and Aprajita Dhundia, supported by Chicago partner Richard Campbell.
Macfarlanes advised the senior management team of GSG with a team led by corporate and M&A partner Howard Corney and including tax partners Mark Hunter and Rob Collard.
A cross-border White & Case team advised the SPAC, dMY Technology Group Inc II, led by partners Joel Rubinstein and Jonathan Rochwarger in New York and Tali Sealman in Silicon Valley. The team also included capital markets partner Era Anagnosti in Washington DC and a London contingent of M&A partners Ian Bagshaw and Richard Jones.
This is the second SPAC founded by Niccolo de Masi and Harry You, with White & Case also advising the first, dMY Technology Group, on its pending $1.78bn combination with Rush Street Interactive, a fast-growing online casino and sports wagering company in the US.
White & Case’s Bagshaw told Legal Business: ‘The wider thing for us is that this is part of the “SPAC attack”. It’s a bit War of the Worlds, but there are a lot of SPAC drones approaching European targets as a hybrid of an M&A deal and a fast-track US IPO.
‘Given the number of SPACs in the market, this will have a profound effect on the European market and will take opportunities away from private equity and European Stock Exchanges. It’s a nascent threat as a third alternative for companies in the mid-market, with deals valued at £500m-£1bn.’
Bagshaw noted that SPACs are attractive because they involve US public equity, resulting in a US valuation and US liquidity, rather than a lower European valuation and reduced levels of liquidity.
He also points to challenges around compressed timeframes for such transactions that require acquisitions to be completed 18-24 months after the SPAC is listed, or else it has to give the money back.
‘There is real firepower coming – the US market is saturated so companies are looking to Europe, predominantly in tech, media, new world economy, Covid-accelerated business models. SPACs are changing the trajectory of a lot of European businesses,’ Bagshaw added.
Earlier in the week, London and Kazakhstan-listed copper company KAZ Minerals became the target of Nova Resources, a consortium led by KAZ Minerals chairman Oleg Novachuk and non-executive director Vladimir Kim, a deal valued at £3bn.
The transaction saw the City elite turn out in force, with key roles handed to Clifford Chance, Linklaters and Macfarlanes.
CC acted for Nova Holdings with a team led by London corporate partners Tim Lewis and James Bole that also included finance partners Nick Kinnersley and Karen Hodson, antitrust partner Jennifer Storey, hedging partner William Winterton and tax, pensions and employment partners Sonia Gilbert and Nick Mace. Links advised KAZ Minerals with a team led by London corporate partner Ian Hunter and including senior partner Charlie Jacobs.
Meanwhile, Macfarlanes advised investment bank VTB Capital as financial adviser to Nova Resources with a team led by corporate and M&A partner Robert Boyle. VTB also provided the financing, with advice supplied by Macfarlanes partner Kirstie Hutchinson, while derivatives and trading advice came from partner Will Sykes.