More Leaks…This Time, It’s GS Acquisition Holdings (GSAH) & Vertiv

We’ve had another SPAC combo leak today, this time it’s regarding the $690 million GS Acquisition Holdings (GSAH) and Vertiv, a portfolio company of Platinum Equity.

Does Platinum Equity ring a bell?  It should.  It’s the private equity firm of none other than Tom Gores, brother of Alec Gores.  Verra Mobility (VRRM), the acquisition of Gores II, was a Platinum Equity company, as is PAE, the intended acquisition of Gores III.  Platinum Equity is clearly familiar with SPAC transactions and the SPAC process, so if the rumors of a Vertiv/GSAH combination are true, that’s especially good news, i.e., both sides of the table will be negotiating with a significant amount of (good) SPAC deal experience.

However, Vertiv is a provider of backup power and fail-safe systems for data centers, which is very different than the industrial sector that GSAH originally intended to look for companies.  Nonetheless, a good deal is a good deal, and if this one makes sense, no one will be complaining.

As for the particulars of Vertiv, it is the former network power business of Emerson Electric (EMR.N), which Platinum Equity acquired three years ago for roughly $4 billion.  However, in 2017, Platinum agreed to sell Vertiv’s automatic transfer switch business to Schneider Electric for $1.25 billion. Today, however, various news sources are citing a potential valuation for a GSAH/Vertiv deal somewhere between $5 and $6 billion, which would be a significant increase from the $4 billion valuation from just four years ago.  However, keep in mind that the technology Vertiv provides supports cloud computing, which is extremely hot, so $5-$6 billion could be a realistic number. We just don’t know yet.

All things considered, if the rumors are true, this could be another interesting SPAC deal to cap off the end the year.  Obviously, more details are needed to evaluate any potential combination, but on the face of it, this one has all the right ingredients, so far.

Lastly, “So-Called” Watch strikes again.  If you recall, I’ve mentioned before the tendency for financial journalists to reference SPACS as “a so-called blank check company”. and today’s coverage of the Vertiv leak did not disappoint.  You can read these “so-called” articles, from today HERE and HERE.  And if you really want to go down a rabbit hole of “so-called blank check company” references, you can go HERE for Virgin Galactic, and HERE, HERE, HERE and HERE for various other times the phrase was used.

Stay tuned for any further “leaks”.