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Global Blue Goes on an FPAC Share Buying Spree


Global Blue Goes on an FPAC Share Buying Spree

May 27, 2020 INTEL by Kristi Marvin

Discloses 15% stake in a 13-D filing.

Global Blue, via Silver Lake, has apparently been hoovering up FPAC public shares in an attempt to control the outcome of this combination to the tune of $97,827,426.53.  As disclosed in this morning’s filing, Globetrotter (Silver Lake’s affiliate) now owns 9,487,500 shares with an average cost of $10.31.  Which is interesting because their cost basis is below current estimated cash in trust value of approximately $10.33.  We’ll come back to that in a moment…

However, per the filing, Globetrotter is also proposing a few changes to the current deal in order to make it more attractive to voting shareholders.  To wit:

GB shareholders would be willing to offer material enhancements for FPAC’s shareholders and warrantholders in the interest of moving toward prompt consummation of the transaction. Specifically, we would be willing to:

    1. Convert the ~$168M cash dividend which GB shareholders will be due to common stock valued at $10 per share, to bolster significantly GB’s liquidity and increase meaningfully the value to other FPAC holders.
    2. Discuss ways to target $1.00+ in value per warrant, paid in connection with the transaction closing, which we believe would benefit all holders.
    3. Match share-for-share every Founder share the Founder agrees to convert to an earn-out share, which would accrete further value to public holders.
    4. Collaborate with FPAC to look to reduce transaction fees and expenses rather than unnecessarily incurring further costs that could be borne by ongoing holders.

Whether these changes would make the deal more attractive is a difficult question since we have yet to get any updated financials on Global Blue since pre-Covid-19 and the resulting international lock-down.  Clearly, since Global Blue’s business relies heavily on international luxury travel, its business will most likely have been significantly impacted, but without any real numbers to look at, it’s impossible to say how these proposed changes to the deal terms fit into the valuation equation.  Is it enough?

However, Globetrotter appears to be appealing to shareholders to vote “YES” by suggesting a $1.00 value in the warrant.  This is because if you vote “YES” or “NO”, you can still redeem the share, but the only way you get to keep your warrants is if the deal is voted through. Additionally, if the deal is voted down, one of two things will happen:

  • FPAC can opt to liquidate the trust – all securities (including warrants) are cancelled, OR
  • Since FPAC has qualified for an extension to September 14, 2020, FPAC can opt to continue searching for a new target company.  In that case, all redeemed shares are returned to shareholders and you do not get the redemption value.  You also still own the warrants.

So now investors have to decide if they want to vote this deal down (to bust it) and take their chances with (hopefully) a new combination from the FPAC team, or…vote yes, take the redemption value and (hopefully) get a $1.00 value on their warrants.  But there is no guarantee warrant holders will get a $1.00 value.  Globetrotter is just saying they will “discuss” it.

There is a third scenario where investors vote yes and DON’T opt to redeem (hold the share), but it seems unlikely in any scenario that this deal would not have a significant number of redemptions.  So really, it comes down to – vote it down and hope for a better transaction or vote yes and take the redemption value and see what happens with the warrants.

Also keep in mind that while Globetrotter/Silver Lake has spent $97 million buying shares, there’s nothing to stop them from ALSO voting yes and redeeming their public shares at the vote.  In fact, since their cost basis is $10.31, they would even make a few pennies by redeeming.  Although, the optics on that would be pretty bad.

In summary, Global Blue has made the first move on the chessboard….let’s see what FPAC does in response.

UPDATE:  Far point put out a press release stating they are “communicating with Silver Lake.”  Oh, to be a fly on that wall…