Slowed SPAC Craze Sees Momentum in Leisure and Luxury, But SEC Blocks Universal Music Deal
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Ermenegildo Zegna, one of Italy’s leading luxury labels, and Bowlero, the giant U.S. bowling chain, pretty much embody their countries’ joie de vivre.
And both firms announced deals to go public by merging with special-purpose acquisition companies on Monday, breathing new life into the SPAC merger craze that’s cooled off in recent months. That is until U.S. regulators stepped in and quashed another deal that would have seen a blank-check firm take a stake in corporate giant Universal Music.
King Pins and Bling Trims
Whether they’re stocking bowling pins or lapel pins, both Bowlero and Zegna are traveling the SPAC-merger route to public markets with eyes on expansion:
- Bowlero, which owns 321 bowling centers in North America (eight times more than its closest competitor), will go public later this quarter at a $2.6 billion valuation. The company plans to expand on its considerable real estate, capitalizing on the growing popularity of casual athletics like bowling and golf among young adults.
- Zegna’s high-end menswear brought in revenues of €1.3 billion in pre-pandemic 2019 and €1 billion last year. The brand expects to reclaim pre-pandemic sales levels this year and will go public at a $3.2 billion valuation, raising $250 million that it plans to direct towards acquisitions.
These sorts of deals are increasingly less common, however. The SEC announced updated guidance on SPAC IPOs in April after a record-breaking quarter, and the rate of new SPAC issuances dropped 90%. That means hundreds of SPACs that went to market in 2020 and early 2021 are still searching for merger targets.
Behind The Music: One such blank-check company got a rude awakening Monday. Billionaire Bill Ackman’s SPAC was planning to buy a 10% stake in Universal Music at a $40 billion valuation, but the deal blew up after the SEC questioned whether it even qualified as a SPAC deal. The result leaves Ackman with few options other than to simply buy the stake in Universal with his hedge fund. Poor guy.