Seven Oaks Acquisition Corp. (SVOK) and bulk-grocery company Boxed Inc. have struck a $640 million merger agreement.
The June 14 deal calls for the New York-based special purpose acquisition company to pay $259 million from its trust account as well as raise an additional $120 million from a private-investment-in-public-equity issuance comprising a combination of common shares and convertible notes. Investors in the financing include Brigade Capital Management LP, Avanda Investment Management Pte. Ltd. and Onex Credit Corp.
The five-year notes are unsecured and pay 7% annually. The notes convert at $12, a 20% premium to the $10 share price of Seven Oaks’ IPO in December.
The sale of common shares will total $32.5 million, while the note sale will raise $87.5 million, according to an investor presentation.
Palantir Technologies Inc. (PLTR) also has agreed to invest $20 million into the financing, buying 2 million shares, subject to certain closing requirements. Seven Oaks also will participate in the financing and will donate $1 million in stock to a foundation associated with Boxed.
Prior investors in the New York-based target include CDIB Capital International Corp., Alpha Square Group Inc., AEON Retail Co. Ltd., Nomura Securities Co. Ltd., Greycroft Venture Capital Co., Hamilton Lane LLC and GGV Capital LLC.
At the close of the transaction, Boxed investors will hold 62% of the newly public company, thanks in part to a 100% equity rollover into the transaction by existing investors. SPAC investors will control 29%, the SPAC sponsor will retain 5%, and PIPE investors will own 4%.
The SPAC sponsor, Seven Oaks Sponsor LLC, has agreed to defer 30% of its equity position such that 15% will vest at $12 a share and another 15% will vest when shares reach $14. The sponsor equity carries a $45 million value, according to an investor presentation.
The companies anticipate the business combination will close before the end of 2021. The newly public company will trade its shares under a ticker that has yet to be determined.
Boxed, also known as Giddy Inc., is a digital grocery shopping platform selling bulk consumables to households and businesses. Founded in 2013, Boxed has been compared to Costco Wholesale Corp. (COST) but doesn’t have the membership component nor that revenue stream. Customers access the Boxed website or app to purchase products.
The company will continue to be led by CEO Chieh Huang, COO Jared Yaman and chief marketing officer Alison Weick.
Seven Oaks went public in a $258 million IPO on Dec. 18 underwritten by Academy Securities Inc., Loop Capital LLC, National Securities Corp., JonesTrading Institutional Services LLC and Tigress Financial Partners LLC. The SPAC had no specific investing focus and so was free to chase a deal in any sector.
The deal filing included a consultants’ report, “The Blossom Project,” looking at Boxed’s positioning in the market. The consulting firm that produced the report on behalf of Seven Oaks was not named, and the SPAC did not respond to a query regarding the report and other details about how the transaction between Boxed and Seven Oaks took place.
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