Forum Merger II Corporation *
PROPOSED BUSINESS COMBINATION: Itella International (Tattooed Chef)
ESTIMATED CURRENT FUNDS in TRUST: $207.5 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.38*
ENTERPRISE VALUE: $482 million
*SPACInsider estimate a/o 10-11-20
Forum Merger II Corp. proposes to acquire Ittella International, a plant-based food company with a broad portfolio of products available both in private label and the Company’s “Tattooed Chef” brand. Itella and Forum will combine as Tattooed Chef, Inc. with an anticipated initial enterprise value of approximately $482 million, 2.2x Tattooed Chef’s estimated 2021 revenue of $222 million, or 15.6x Tattooed Chef’s estimated 2021 Adjusted EBITDA of $30.8 million.
Tattooed Chef Investment Highlights
- High growth and innovative plant-based food company with an established brand as well as a private label presence, serving leading national retailers, with significant growth opportunities through expanded distribution to new and existing customers
- Large addressable market in the $55 billion U.S. frozen food category where plant-based products are rapidly expanding share
- Strong product positioning aligned with major consumer trends
- Diverse portfolio of plant-based products with a proven innovation track record of creating great tasting, unique flavor profiles that allow consumers to connect with a plant-based lifestyle
- Passionate management team with deep food industry expertise
- Compelling financial profile
- Projected $148 million and $222 million in revenue and $17 million and $31 million in Adjusted EBITDA in 2020 and 2021, respectively
- Projected 2018-2021 revenue compounded annual growth rate of 67%
- Anticipated initial enterprise value of approximately $482 million implying a 2.2x and 15.6x multiple of projected 2021 revenue and Adjusted EBITDA, respectively
Tattooed Chef will be led by Sam Galletti, President and CEO, Stephanie Dieckmann, COO and CFO, and Sarah Galletti, the creator of Tattooed Chef and Creative Director. The Company intends to split the roles of CFO and COO and has initiated a search for a new CFO. Stephanie Dieckmann will continue to serve both roles until a new CFO has been appointed.
TRANSACTION SUMMARY
In connection with the transaction, the Company’s current shareholders are retaining 80% of their equity, which will convert into 60% of the outstanding shares of the combined company at closing, assuming no redemptions by Forum’s public stockholders. After giving effect to any redemptions by the public stockholders of Forum, the balance of the approximately $200 million in cash held in Forum’s trust account will be used to pay cash consideration to the Company’s shareholders and transaction expenses, with the remainder staying on the balance sheet to fund the combined company’s growth and for general corporate purposes. The Company’s current shareholders will have the potential to receive an earnout, payable in the form of Tattooed Chef common stock, if certain Tattooed Chef stock price targets are met, as set forth in the definitive agreement.
The transaction is expected to close in the third quarter of 2020.
SUBSEQUENT EVENTS
Amendment to the merger agreement on 8/10/20 (filed 8/11/20)
Pursuant to the Amendment, the Merger Agreement was revised to:
- (i) identify an updated delivery deadline for the PCAOB Audited Financial Statements (as defined in the Merger Agreement) by Ittella Parent to the Company as August 14, 2020,
- (ii) address a scrivener’s error in the form of Registration Rights Agreement and add Project Lily, LLC as a party thereto,
- (iii) reflect White & Case LLP as primary counsel to Forum following the signing of the Merger Agreement,
- (iv) change the Termination Date in the Merger Agreement to November 15, 2020 and
- (v) carve out any Indebtedness (as defined in the Merger Agreement) of Forum or its subsidiaries paid off at the closing of the Business Combination (the “Closing”) through the funds flow from the definition of “Additional Available Cash Consideration” in Annex I of the Merger Agreement.
The Closing is expected to take place in early October, as soon as practicable after the special meeting, subject to the satisfaction or waiver of the closing conditions in the Merger Agreement.
NOTABLE CONDITIONS TO CLOSING
- That Forum shall have cash available to pay at least $50 million of the Merger Consideration in cash at the Closing
NOTABLE CONDITIONS TO TERMINATION
The Merger Agreement may be terminated prior to the Closing under certain circumstances, including, among others,
- By written consent of Ittella Parent and Forum,
- By written notice from either Forum or Ittella Parent, if the Closing has not occurred on or before September 30, 2020 (the “Termination Date”), unless the terminating party’s failure to comply with its obligations under the Merger Agreement has resulted in the Closing not occurring on or before such date,
- By written notice from either Forum or Ittella Parent, in the event that the other party breaches any of its representations, warranties, covenants or other agreements under the Merger Agreement in a manner that would result in the failure of the conditions to Forum’s obligation to consummate the Business Combination as of the Termination Date and such breach has not been cured within 30 days after receiving notice,
- By written notice to Ittella Parent from Forum if at any time prior to the approval by Forum’s public stockholders, the board of directors of Forum shall have effected a change in recommendation and
- By written notice to Forum from Ittella Parent if at any time prior to the approval by Forum’s public stockholders, if the board of directors of Forum shall have effected a change in recommendation.
EARNOUT
ITELLA HOLDBACK SHARES
If during the three (3) year period following the Closing Date (the “Holdback Period”)
- The price per share of Parent Common Stock on any twenty (20) trading days in any thirty (30) day trading period
- (i) equals or exceeds Twelve U.S. Dollars ($12.00) (the “First Share Price Trigger”), or
- (ii) equals or exceeds Fourteen U.S. Dollars ($14.00) (the “Second Share Price Trigger,” and, together with the First Share Price Trigger, each a “Share Price Trigger” and collectively, the “Share Price Triggers”)
- Then, for each Share Price Trigger that is achieved, the holders of Company Interests as of immediately prior to the Effective Time shall receive additional consideration (in accordance with their Pro Rata Share) from Parent (each, a “Holdback Release”) of Two Million Five Hundred Thousand (2,500,000) shares of Parent Common Stock released from escrow (collectively, the “Ittella Holdback Shares”).
- For the avoidance of doubt and notwithstanding anything contained in this Agreement, the holders of Company Interests shall have the right to receive no more than two Holdback Releases,
- A Holdback Release may only be achieved once with respect to any Share Price Trigger and the aggregate sum of all Holdback Releases, together with a Change of Control Holdback Release, issuable hereunder (assuming both Share Price Triggers are achieved and/or a Change of Control occurs during the Holdback Period), shall be a maximum of 5,000,000 shares of Parent Common Stock.
SPONSOR EARNOUT SHARES
the Sponsor agrees to place into escrow 2,500,000 shares of Parent Common Stock that were purchased by Sponsor in a private placement prior to the IPO (the “Sponsor Earnout Shares”).
- Vested according to same price triggers above, 50% for each price trigger.
ADVISORS
- Harrison Co. acted as financial advisor to Ittella International.
- Rutan & Tucker, LLP served as legal counsel to Ittella International.
- Jefferies LLC served as lead financial advisor and capital markets advisor to Forum.
- EarlyBirdCapital, Inc. served as financial advisor to Forum.
- Winston & Strawn LLP served as legal counsel to Forum.
FORUM MERGER II CORP. MANAGEMENT & BOARD
Executive Officers
Marshall Kiev, 50
Co-Chief Executive Officer, President and Director
Mr. Kiev has over 26 years of alternative investing experience. He has been the President and Founder of MK Capital Partners, a private investment firm, since 2016. The firm’s primary investment strategies include direct private equity, growth equity and venture capital. Mr. Kiev was Co-Chief Executive Officer, President and Director of Forum I until its business combination with ConvergeOne (Nasdaq: CVON). Mr. Kiev was previously a Director of Cohen Private Ventures, or CPV, from 2013 to 2016. CPV is a family office investing long-term capital in direct private investments and other opportunistic transactions. Prior to his position with CPV, Mr. Kiev was Chief of Staff at S.A.C. Capital Advisors, L.P., an investment firm, from 2010 to 2013. Prior to joining S.A.C., Mr. Kiev was President of Alternative Investments at Family Management Corporation, a multi-family office, from 2007 to 2009, where he oversaw a portfolio of investments in hedge funds and private equity funds. Previously, Mr. Kiev was a Partner at Main Street Resources, a middle-market private equity firm, from 2000 to 2007. He began his career in 1989 at Family Management Corporation where he held a variety of roles over more than a decade. Mr. Kiev is an active member of the Young Presidents’ Organization and a former member of the Dean’s Council at Weill Cornell Medical College and is President of the Kiev Family Foundation. Mr. Kiev received an MBA degree from the Stern School of Business at New York University and a BA degree also from New York University.
David Boris, 58
Co-Chief Executive Officer, CFO and Director
Mr. Boris served as Co-Chief Executive Officer, Chief Financial Officer and Director of Forum I from its inception in November 2016 until Form I’s business combination with ConvergeOne and has served as a member of ConvergeOne’s board of directors since the business combination. He has over 30 years of Wall Street experience in mergers and corporate finance and has been involved in 14 SPAC transactions as an advisor, investment banker and/or officer or board member, including ten business combinations totaling over $4.4 billion. Mr. Boris was a Director of Pacific Special Acquisition Corp., or Pacific, a SPAC formed by one of the leading independent investment banks in China, from July 2015 until Pacific’s business combination with Borqs Technologies, Inc. (Nasdaq: BRQS) in August 2017. In addition, he served as advisor to Limbach Holdings, Inc. (Nasdaq: LMB) in connection with its merger with 1347 Capital Corp., a SPAC, from 2015 to 2016. From November 2010 to May 2013, Mr. Boris served as Chairman of Primcogent Solutions LLC, leading the board during the period of the company’s preparation to seek reorganization by way of a voluntary bankruptcy petition, which was filed in 2013. Mr. Boris served as a director of Trio Merger Corp., a SPAC, from its inception through its business combination with SAExploration Holdings, Inc. (Nasdaq: SAEX). Mr. Boris served as Senior Managing Director and Head of Investment Banking at Pali Capital, Inc., an investment banking firm, from 2007 to 2010, and was a founding member and Managing Director of Morgan Joseph & Co. Inc., an investment banking firm, from 2001 to 2007, where he was head of both the Financial Sponsors and Media Groups. Mr. Boris served as President of Ladenburg Thalmann Group Inc. from 1999 to 2000, and was also Executive Vice President and Head of Investment Banking at Ladenburg Thalmann & Co. Inc. from 1998 to 2000. In addition, he was a co-founder, director, and a principal stockholder of Brenner Securities Corporation and its successors. Prior to Brenner, Mr. Boris was at Oppenheimer & Company Inc., as a Senior Vice President and Limited Partner. Mr. Boris began his career as a member of the Business Development Group of W.R. Grace & Company, from 1984 to 1985. He is an active member of the Young Presidents’ Organization, an organization with over 25,000 members who are in the top position of a qualifying company or division and are directly responsible for all operations of such business or division. Mr. Boris received a M.B.A. from Columbia University Business School and a B.A. from Vassar College, cum laude.
Board of Directors
Neil Goldberg, 65
Director Nominee
Mr. Goldberg served as a director of Forum I from initial public offering until the business combination with ConvergeOne. He has 45 years of retailing, merchandising, general management and real estate experience. Mr. Goldberg has served as President and CEO of Raymour and Flannigan Furniture and Holdings, one of the largest furniture retailers in the United States, since 1972. He has led the growth of Raymour and Flannigan from three local stores to its current 106 locations across seven Northeast states employing more than 4,700 people. In addition, Mr. Goldberg has been active on numerous national industry boards including the National Home Furnishing Association, the Home Furnishing Council, the American Furniture Hall of Fame and FurnitureFan.com. He has also participated on the board of local and national charitable organizations including the HSBC Bank Regional Board, the Metropolitan Development Association, Say Yes to Education, the Salvation Army of Central New York and the Syracuse University School of Management. Mr. Goldberg has been honored for his work as a recipient of the Ernst and Young Entrepreneur of the Year, the City of Hope Spirit of Life Award and the Anti-Defamation League American Heritage Award. Mr. Goldberg received a B.S. in accounting from the Syracuse University School of Management.
Richard Katzman, 61
Director Nominee
Mr. Katzman served as a director of Forum I from initial public offering until the business combination with ConvergeOne and has served as a director of ConvergeOne since such business combination. He is a private investor in early stage companies and a member of the New York Angels investing group, advising and investing in over two dozen startups. He is also an Executive Director and board member of The Noodle Companies, a group of early stage ventures seeking to increase transparency and efficiency in education, based in New York City. Mr. Katzman was President, Chairman & CEO of Kaz, Incorporated, a multinational consumer appliance company, from 1987 until its sale in December 2010. Kaz’s products include humidifiers, vaporizers, digital thermometers, hot/cold therapy, heaters, fans, and air cleaners. Under his leadership, the company grew from $4 million in annual sales to $500 million by expanding its product offerings, developing international distribution, and pioneering brand extension licensing with global power brands Vicks, Honeywell and Braun. Mr. Katzman also co-founded Terra Firma Software, a provider of enterprise solutions and an early developer of Macintosh applications, in 1982. Mr. Katzman is a board member of Brown University’s Entrepreneurship Program, was Executive in Residence for the first cohort of the IE-Brown Executive MBA program in 2011-12 and has been a judge in several business plan competitions. Mr. Katzman was a board member of Princeton Review from its founding in 1982 until 2012, currently serves on the boards of Hudson Opera House, Bard’s Creative Council, and Generation Citizen, and was a trustee of Columbia Memorial Hospital in Hudson, NY. He is also a member of the Young Presidents’ Organization. Mr. Katzman graduated with an A.B. from Brown University and attended the Singularity University Executive Program.
Steven Berns, 53
Director Nominee
Mr. Berns served as a director of Forum I from Forum I’s initial public offering until the business combination with ConvergeOne. Mr. Berns is the Chief Operating Officer and Chief Financial Officer of Shutterstock, Inc. (NYSE: SSTK), a leading global provider of high-quality licensed photographs, vectors, illustrations, videos and music to businesses, marketing agencies and media organizations around the world. From July 2013 through August 2015, Mr. Berns served as Executive Vice President and Chief Financial Officer of Tribune Media Company (Nasdaq: TRCO) (formerly Tribune Company), one of the country’s leading multimedia companies, operating businesses in broadcasting, publishing and digital media. Prior to that time, Mr. Berns was the Executive Vice President and Chief Financial Officer of Revlon, Inc. (NYSE: REV), a worldwide cosmetics and beauty products company, from May 2009 to July 2013. Prior to that time, Mr. Berns was Chief Financial Officer of Tradeweb Markets, LLC, a leading over-the-counter, multi-asset online marketplace for securities trading and trade processing, from November 2007 until May 2009. From November 2005 until July 2007, Mr. Berns served as President, Chief Financial Officer and Director of MDC Partners Inc. (Nasdaq: MDCA) and from September 2004 to November 2005, Mr. Berns served as Vice Chairman and Executive Vice President of MDC Partners. Prior to that, Mr. Berns was the Senior Vice President and Treasurer of Interpublic Group of Companies, Inc., (NYSE: IPG) an organization of advertising agencies and marketing services companies from August 1999 until September 2004. Before that, Mr. Berns held a variety of positions in finance at Revlon, Inc. from April 1992 until August 1999, becoming Vice President and Treasurer in 1996. Prior to joining Revlon in 1992, Mr. Berns worked at Paramount Communications Inc. and at a predecessor public accounting firm of Deloitte & Touche. Mr. Berns has served on several Boards including Shutterstock, Inc. (NYSE: SSTK) (from 2012 to 2015 as Director and Chairman of the Audit Committee) and LivePerson, Inc. (Nasdaq: LPSN), from 2002 to 2011 as Director and Chairman of the Compensation Committee. Mr. Berns received a BS from Lehigh University and an MBA from the Stern School of Business at New York University.
Jeffrey Nachbor, 53
Director Nominee
Mr. Nachbor has served as ConvergeOne’s Chief Financial Officer since September 2013. From 2008 until 2013, Mr. Nachbor served as Senior Vice President of Finance & Chief Accounting Officer of Leap Wireless International, Inc., a telecommunications company which was later acquired by AT&T Inc. From September 2005 to March 2008, Mr. Nachbor served as Senior Vice President and Corporate Controller of H&R Block, Inc. (NYSE: HRB). From February 2005 until August 2005, Mr. Nachbor served as Chief Financial Officer and Treasurer of Sharper Image Corporation, a consumer electronics retailer. From 2003 to 2005, Mr. Nachbor served as Senior Vice President and Corporate Controller of Staples, Inc., a business supplies and equipment retailer. Mr. Nachbor holds a B.A. in accounting from Old Dominion University, an M.B.A. from University of Kansas, and is a Certified Public Accountant.