Union Acquisition Corp. II – Back for Another SPAC

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Union Acquisition Corp. II – Back for Another SPAC

The team from Union Acquisition Corp. made a surprise filing on Friday with their second SPAC, Union Acquisition Corp. II (LATNU), a $175 million IPO focused, once again, on Latin America.  Union II will be led by the exact same team as Union I, albeit with a few changes to titles.  Juan Sartori, who was previously Chairman of the Board, will now be Non-Executive Chairman of the Board, and Daniel Fink, who was previously a Director, will now be Chief Operating Officer and Director. Kyle Bransfeld, will once again be Chief Executive Officer and Director.

Kyle Bransfeld, is a partner at Atlantic-Pacific Capital (a global placement and advisory firm), where he has led the firm’s global direct private placement and structured investment activities since 2015.  Additionally, Mr. Bransfeld is also on the board of Bioceres Crop Solutions (NYSE American: BIOX), which is the business combination company of Union Acquisition I, that closed its transaction in March of this year.

However, looking at Bioceres, which provides “crop productivity solutions” and is based in Argentina, it previously traded to a low of $4.01 post closing, but has since bounced back to ~$6.45.  Not a winner, but certainly not as bad as some of the other combinations we’ve seen this year, and a steady rise in the share price as of late is certainly a check mark in the “plus” column. However, the original Union I’s structure was a 21 months, 1 share + 1 warrant + 1 right, and 101% in trust ($10.10) SPAC. Very rich. Union II’s structure is 18 months, 1 share + 1 warrant, 100% in trust ($10.00) SPAC (see table below). Clearly, they are asking for more favorable terms for this go-around.

The removal of the right is not going to be much of an issue with investors (and some will find it to be a benefit), however, moving down from 101% in trust to 100% seems iffy given the performance of Union I/BIOX.  To be clear, SPAC investors redeemed their shares for Union I at the shareholder vote, so they weren’t “hurt” by the post-closing share price.  However, SPAC investors do not invest their capital for 18 – 24 months to just collect the redemption price. Investors want a winning transaction that trades significantly above the redemption value. So, given the results of Union I, will investors be willing to accept the terms of Union II? Or, will they push back and look for an extra 1% as additional protection? It’s going to be a challenging roadshow and a discussion of terms is most likely on the menu.

Interestingly, Cantor will only be getting the upfront underwriting fee of 2%.  Cantor will not be participating on the back-end.  Instead, Atlantic-Pacific Capital, the firm of Kyle Bransfeld, will be paid the 3.5% Business Combination Market Fee upon the successful completion of a business combination.  Not unprecedented, but certainly a little unusual.

Look for this SPAC to price mid-October.

Summary of terms below:

Union II terms2 10-1-19