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Mergers & Acquisitions

Redbox Goes Public in SPAC Transaction

Published: May 25th, 2021
Seaport Global Acquisition agrees to a $693 million deal with the entertainment retailer.

Redbox Inc., the provider of red kiosks found in front of supermarkets and drugstores, will move to a new home on the Nasdaq exchange.

The Oakbrook Terrace, Ill., entertainment company agreed May 17 to go public through a merger with special purpose acquisition company Seaport Global Acquisition Corp. (SGAM).

The transaction, valued at $693 million, calls for Redbox to receive $145 million from Seaport’s trust account and another $50 million from a private placement. Investors in the private placement include Ophir Asset Management, Lions Gate Entertainment Corp. (LGF.A), Legendary Entertainment and Screenvision.

According to securities filings about the deal, 100% of Redbox investors have agreed to roll their equity into the business combination. The majority investor in Redbox is Apollo Global Management Inc. (APO), which acquired its stake by purchasing Redbox parent company Outerwall Inc. in 2016 for about $1.6 billion.

When the business combination closes, Redbox investors will control 58.8% of the newly public company. SPAC investors will hold 25.8%, PIPE investors will own 9%, and the SPAC sponsor will own 6.4%.

The deal valuation is based on 3.6 times 2022 estimated Ebitda.

Redbox is best known for its DVD rental business, but streaming entertainment has affected the company. The company is attempting to transition into a different business model that would include digital entertainment. On closing, Redbox said it expected to have $209 million in cash on hand. It will use about $100 million of the deal proceeds to pay down existing debt, with the balance accelerating the company’s transition to film distribution, transactional video on demand and premium video on demand. The company also plans to develop ad-supported programing and subscription services.

Redbox will trade its shares under the ticker RDBX post-merger, and the company will continue to be led by CEO Galen Smith, CFO Kavita Suthar and chief digital and strategy officer Jason Kwong. Redbox expected the deal would close in the third quarter.

The SPAC went public via a $143.7 million initial public offering in November, with B. Riley Securities Inc. as the sole underwriter. The SPAC is sponsored by Seaport Global Asset Management LLC, a New York-based private investment firm. The SPAC is the firm’s first venture into sponsorship, and Seaport Global’s investment focus was on reorganized or distressed companies, according to its October registration statement.

Editor’s note: The original version of this article was published earlier on The Deal’s premium subscription website. For access, log in to or use the form below to request a free trial.

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