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Wynn Resorts’ dead deal shows there’s more pain to come in SPACs

November 15, 2021, 4:36 PM UTC

There’s been no shortage of breakups in the frothy world of SPACs.

On Friday, Wynn Resorts and a special purpose acquisition company together called off a $3.2 billion deal to take the publicly-traded casino operator’s online betting business public via merger. 

The duo were light on the details. Actually, they said a lot of nothing in the merger’s death. “With our continued roll out of product features and planned new state launches, including New York, we remain excited about WynnBET’s future,” The CEO of Wynn Interactive (the online betting subsidiary) Craig Billings said in a statement regarding the dead merger with Austerlitz Acquisition Corporation I.

But it’s worth noting that despite Billings’ bullish tone on Interactive, the segment of Wynn’s business is in a high-cash-burning industry with heavy competition. It’s one the company knows well. As Wynn CEO Matt Maddox said in the company’s most recent earnings call: “The market is really not sustainable right now. Competitors are spending too much to get customers.” He added that Wynn would pursue a more sustainable customer acquisition model instead.

Wynn Interactive’s scuttled merger however is not the only SPAC deal to fall apart in recent months—or even past days. Just last week, Hennessy Capital Investment V announced the death of its merger with Plus, a self-driving tech company. BBQGuys terminated its deal with Velocity Acquisition. Vertical farming company AeroFarms also agreed to kill its deal with Spring Valley Acquisition in October. 

SPACs aren’t dead—but amid increased scrutiny from regulators, a drop in investor confidence in the class as a whole, and a shifting economy, many investors in the field should be ready for some pain.

It’s also notable that Billings is giving the statement regarding Wynn’s broken deal because he is not the CEO of the overall company—yet. Yes, in Wynn’s last earnings report just a few days ago, the company announced that CEO Maddox would be leaving the company in January. Maddox announced his departure saying he had completed his goals as the top executive at the company—though it’s hard to forget that Wynn itself has been in painful turmoil in his final months there, with the global pandemic razing the company’s earnings. Even now, shares of the company are up about 1% over the past year while the S&P 500 is up over 29%.

THE CIRCLE OF CONGLOMERATES: The breakups of conglomerate giants General Electric, Johnson & Johnson, and Toshiba may seem like a death knell for the business model as a whole—but that doesn’t seem quite right. Afterall, companies like Alphabet are expanding beyond what seems to be their core competencies, into self-driving and internet air balloons.

Here’s an interesting story from Bloomberg: “The technology arena has been driving these transactions and created what University of Michigan business professor Jerry Davis calls ‘neo-conglomerates.’ Among them are Facebook parent Meta Platforms Inc., Tesla Inc., Amazon.com Inc., and Google parent Alphabet.” Read more.

Lucinda Shen
Twitter: 
@shenlucinda
Email: 
lucinda.shen@fortune.com

VENTURE DEALS

- Podium, a Lehi, Ut.-based communication and payments company for local businesses, raised $201 million in Series D funding. YC Continuity led the round and was joined by investors including Durable Capital Partners, Arpex Capital, Accel, Album VC, IVP, Sapphire Ventures, Summit Partners, and Sorenson Capital. This latest round values the company over $3 billion. 

- ThoughtSpot, a Palo Alto, Calif.-based business intelligence and analytics company, raised $100 million in Series F funding at a $4.2 billion valuation. March Capital led the round and was joined by existing investors including Lightspeed Ventures, Snowflake, Khosla Ventures, Fidelity, Capital One Ventures, General Catalyst, and Sapphire Ventures.

- Pigment, a Paris-based business planning and forecasting software maker, raised $73 million in Series B funding. Greenoaks led the round and was joined by investors including FirstMark Capital and Blossom Capital.

- Daily Harvest, a New York City-based frozen food startup, raised $77 million in Series D funding, valuing the company at over $1 billion. Lone Pine Capital led the round.

- Rsquare, a South Korean office marketplace, raised $72 million (85 billion won) in Series C funding. STIC Investments invested.

- Oxygen, a San Francisco-based banking startup focused on consumers and small businesses, is in talks to raise $70 million at a $500 million, per TechCrunch. Tribe Ventures is said to be in talks to lead the deal.

- Zoomo, a New York City-based electric last mile delivery vehicle maker, raised $60 million. Grok Ventures led the round.

- Vivenu, a German-based ticketing platform for organizers and venues, raised $50 million in Series B funding. Investors including Activant Capital led the round and were joined by investors including Balderton Capital, Aurum Fund, and Redalpine Venture Partners.

- Netography, an Annapolis, Md.-based security company, raised $45 million in Series A funding. Bessemer Venture Partners and SYN Ventures led the round and was joined by investors including Andreessen Horowitz, Mango Capital, Harpoon Ventures, and Wing Venture Capital. 

- Ometria, a London-based marketing platform, raised $40 million in Series C funding. InfraVia Growth led the round and was joined by investors including Octopus Ventures, Sonae IM, Summit Action, Adjuvo, and Columbia Lake Partners.

- Zesty, an Israel-based cloud management company, raised $35 million in Series A funding. Next47 led the round and was joined by investors including Sapphire Ventures and Samsung Next.

- Habu, a San Francisco and Boston-based data cleaning software company, raised $25 million in Series B funding. Wing Venture Capital led the round and was joined by investors including Snowflake Ventures, super{set}, Norwest Venture Partners, and Ridge Ventures.

- Writer, a San Francisco-based A.I. writing assistant, raised $21 million in Series A funding. Insight Partners led the round.

- Mimica, a London-based automator of Robotic Process Automation, raised $6 million in Series A funding. Khosla Ventures led the round.

- ALEX, a New York City-based DeFi platform on Bitcoin, raised $5.8 million. White Star Capital led the round and was joined by investors including Cultur3, GBIC, and OK Blockchain Capital.

- DrugStoc, a Nigerian pharmaceuticals delivery company, raised $4.4 million in Series A funding. Africa HealthCare Master Fund led the round.

- Plentina, a Philippines-based buy now, pay later startup, raised $2.2 million. TMV led the round.

PRIVATE EQUITY

- Durational Capital Management will acquire Casper Sleep, the mattress company, in a take-private deal. The all-cash deal—valuing the company at $286 million—values the company 94% above its Friday closing price.

- American Securities invested in r-pac, a New York City-based provider of branded packaging, trims, sensor technologies, and supply chain solutions. Financial terms weren't disclosed.

- ECI Software Solutions, backed by Leonard Green and Partners, acquired INSEARCH, a cloud-based construction business management software maker. Financial terms weren't disclosed.

- Great Hill Partners invested in Prodege, a marketing and consumer insights company. Financial terms weren't disclosed.

- Riveter Capital acquired Healthy Lunch Box, a Texas-based food service provider. Financial terms weren't disclosed.

- TSG Consumer Partners agreed to acquire a majority stake in Super Star Car Wash, a Phoenix, Ariz.-based car wash operator. Financial terms weren't disclosed.

- Susquehanna Private Capital launched LUV Car Wash, a Gilbert, Ariz.-based car wash company. Financial terms weren't disclosed.

- TZP Group has acquired Home Brands Group, which operates the Re-Bath bathroom remodeling franchise.

EXIT

- Booking Holdings agreed to acquire Getaroom, a Dallas-based hotel booking company, for about $1.2 billion, from Court Square Capital Partners.

- L’OCCITANE International (HKG: 0973) acquired Sol de Janeiro, a Brazilian-inspired skincare brand, from Prelude Growth Partners. Financial terms weren't disclosed.

OTHER

- Cuscaden Peak now says it will offer to buy Singapore Press Holdings, the Singapore-based media business, for S$3.9 billion ($2.88 billion), upping a bidding war against Keppel Corp.

- Heineken agreed to acquire South African wine and spirits maker Distell Group Holdings, a South African wine and spirits maker, for 2.2 billion euros ($2.5 billion).

- BM Technologies (NYSE: BMTX), a digital banking company, will merge with First Sound Bank, a Seattle-based community bank. Financial terms weren't disclosed.

- Donald Trump's family hotel company will sell the rights to its Washington, D.C., hotel for $375 million, per the Wall Street Journal.

- Spotify agreed to acquire Findaway, a Solon, Oh.-based audiobook distributor. Financial terms weren't disclosed.

IPOS

- Rue Gilt Groupe, a discount e-commerce site backed by Simon Properties, filed for an IPO.

SPACS

- Obagi and Milk Makeup, two skincare brands, will go public together in a merger with Waldencast Acquisition, a SPAC, in a $1.2 billion deal.

F+FS

- Lightyear Capital closed its fifth flagship fund at $1.6 billion.

- True Wind Capital closed its second fund at $817 million.

- Olympus Corporation launched Olympus Innovation Ventures with $50 million.

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