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Act II Global Acquisition Corporation

Act II Global Acquisition Corporation

Oct 19, 2020 by Roman Developer

SUBSEQUENT EVENT – 2/13/24 – LINK

  • Whole Earth Brands is to be acquired by Sababa Holdings FREE, LLC for $4.875/Share.

PROPOSED BUSINESS COMBINATION: Flavors Holdings Inc.

ESTIMATED CURRENT FUNDS in TRUST: $305.4 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.18*
ENTERPRISE VALUE: $439.0 million

*SPACInsider estimate a/o 6-24-20

Act II Global Acquisition Corp. proposes to combine with Flavors Holdings Inc. (“Flavors”). Merisant Company (“Merisant”), a manufacturer of zero and low-calorie sugar substitutes, and the owners of MAFCO Worldwide LLC (“MAFCO”), a manufacturer of natural licorice products, are subsidiaries of Flavors Holdings. It is anticipated that, upon consummation of the proposed transaction, the company will have an anticipated initial enterprise value of approximately $575 million, or 8.1x the Flavors Holdings’ estimated Calendar Year 2020 Pro Forma EBITDA of $71 million. Completion of the proposed transaction is currently expected by the end of the first quarter of 2020

Merisant is one of the world’s leading manufacturers of tabletop non-caloric sweeteners. The company markets its products under its flagship brands Whole Earth®, Equal®, Canderel®, and Pure Via®, along with several other adjacent consumer products in over 90 countries.

MAFCO has been one of the world’s leading manufacturers of natural licorice products for over 150 years. MAFCO’s natural licorice products many of which are under the Magnasweet® brand are used today in a wide range of applications including food, beverage, pharmaceutical, confectionary, cosmetic, personal care and tobacco products.

TRANSACTION SUMMARY

The transaction will be funded through a combination of cash available in the trust, roll-over stock and debt financing.

At closing, the owners of Merisant and MAFCO will receive $510 million in total consideration, consisting of:

  • $450 million in cash
  • 6 million shares of Class A Ordinary Shares of Act II, subject to adjustment in accordance with the terms of the definitive agreement.
  • At closing, the owners of Merisant and MAFCO will receive 1 million shares of Class A Ordinary Shares of Act II placed in escrow

EARNOUT

Merisant and MAFCO owners will have the opportunity to receive incentive earnout shares totaling approximately 2.7 million shares consisting of:

  • 1.4 million shares, if the VWAP trading price of the Class A Ordinary Shares is at or above $14 per share for 20 of any 30 day continuous trading period, and
  • Approximately 1.3 million shares, if the VWAP trading price of the Class A Ordinary Shares is at or above $16 per share for 20 of any 30 day continuous trading period

Earnout period expires five (5) years from the Closing Date

DEBT

  • Act II has received a commitment from TD Bank to provide for the contemplated debt financing of $185 million funded Term Loan A and $50 million revolving credit facility ($5 million drawn at close).

SPONSOR SHARES & PRIVATE PLACEMENT PURCHASE

  • Founder Shares – 7,500,000 at IPO
    • 3,000,000 escrowed and to be release in the event the VWAP is at or above $13.50 per share for 20 days in a 30 trading day period, a Change in Control, or the expiration of the Earnout Period
    • 2,000,000 escrowed and to be release in the event the VWAP is at or above $15.00 per share for 20 days in a 30 trading day period, a Change in Control, or the expiration of the Earnout Period
  • Private Placement Warrants at $1.00 – 6,750,000 at IPO (none to be cancelled)

Earnout period expires five (5) years from the Closing Date

SUBSEQUENT EVENTS – February 12, 2020

  • Entered into a private placement transaction, at a $10 per share benchmark, with a consortium of investors and accounts led by institutional investor Baron Small Cap Fund for gross proceeds of $75 million
  • In addition, the Company announced an amendment to the terms of its previously announced proposed share purchase agreement with certain entities related to the business and operations of Merisant Company (“Merisant”) and MAFCO Worldwide LLC (“MAFCO”). Under the terms of the proposed amendment:
    • Following the closing, the Sellers will no longer receive the previously agreed 1.0 million shares in escrow
    • the Sellers will also forfeit their contingent right to any additional earnout consideration, which had totaled up to approximately 2.7 million shares;
    • Act II Global LLC (the “Sponsor”) will forfeit 3.0 million Class B ordinary shares;
    • 61% of the Sponsor’s private placement warrants will be eliminated at the closing of the business combination;
    • as a condition to the parties’ obligations to complete the private placement, Act II will amend all other publicly-held warrants so that each such warrant holder will receive, following the closing of the business combination a cash payment of $0.75 per warrant (with the Sponsor and the private placement investors waiving the right to any such cash payment) and the warrant will be exercisable for one-half of a Class A ordinary share for an exercise price of $5.75 for each one-half share ($11.50 per whole share), effectively eliminating 50% of the dilution from the public warrants.
    • Net leverage following the consummation of the private placement and warrant amendment is expected to be approximately 2.0x, as opposed to 3.0x as previously announced.

SUBSEQUENT EVENTS – May 11, 2020

On May 8, 2020, the Sellers, Act II and Project Taste Intermediate LLC, a direct, wholly-owned subsidiary of the Act II (“Intermediate Holdco”) entered into Amendment No. 2 to Purchase Agreement (the “Purchase Agreement Amendment”), pursuant to which the parties amended certain provisions of the Purchase Agreement, in order to, among other things:

  • Reduce the Purchase Price by an aggregate of $70 million, consisting of
    • a reduction to the Base Cash Consideration from $450 million to $415 million
    • a reduction to the Purchaser Ordinary Shares Consideration from Class A Ordinary Shares valued at $60 million to $25 million (subject to the adjustment mechanics described below);
  • With respect to the reduction to the Purchaser Ordinary Shares Consideration described above, such amount will now be defined as the number of Class A Ordinary Shares equal to the higher of:
    • 2,500,000
    • the quotient of (x) the sum of $25,000,000 plus the amount, if any, by which the Base Cash Consideration is reduced in accordance with mechanics described below, divided by (y) the lowest per share price at which Class A Ordinary Shares are sold by Act II to any Person from and after the date of the Purchase Agreement but prior to, at or in connection with the Closing; and
  • Provide Act II with the option, immediately prior to Closing, to reduce the Base Cash Consideration by the amount of funds necessary (up to $20,000,000) for Act II to pay
    • The Cash Consideration,
    • Any amounts paid in connection with the Warrant Amendment, and
    • The Transaction Costs in exchange for a dollar-for-dollar increase in the Purchaser Ordinary Shares Consideration.

SUBSEQUENT EVENTS – June 16, 2020

Act II Global Acquisition Corp. (ACTT) filed an 8-K on June 16, 2020 announcing a number of amendments to their merger agreement with Whole Earth Brands.  The transaction is now expected to total $439.0M vs. $516.0M.

  • Cash consideration reduced from $415.0M to $387.5M).
    • This comes after the base cash consideration from reduced from $450.0M to $415.0M back on May 8th.
  • Reducing minimum cash condition to $153.0M
    • Down from $210.0M as stated in the initial combination proposal.
  • Eliminating Purchaser Ordinary Shares Consideration
    • Was reduced from $60.0M to $25.0M back in May’s amendment.
  • Increase the number of Class A ordinary shares of Act II (“Act II Class A Shares”), to be deposited into escrow by the sponsor at the Closing from 2.0M to 3.0M shares
    • They are increasing the earn-out with original $20 per share hurdle
  • Confirms there is no change to the $75.0M PIPE
  • Transaction expected to close by end of June

Valuation:

  • Amended transaction terms reflect an improved valuation of 6.75x pro forma adjusted 2020 EBITDA compared to 7.9x under the transaction terms announced in May 2020
  • Anticipated net leverage will decrease to 0.8x from 1.4x under the transaction terms announced in May 2020 providing incremental capacity to support accelerated growth and future acquisitions

Revised Transaction Overview 6-16-20

Act II transaction summary 6-16-20

Revised Transaction Overview 5-11-20
  • Act II transaction summary 5-11-20
Previous Transaction Overview 2-13-20

Act II transaction summary 2-13-20

Original Transaction 12-19-20

Act II Global transaction summary 12-20-19

NOTABLE CONDITIONS TO CLOSING

  • At closing, Act II is required to have at least $170,000,000 available to it from its trust account created in connection with its initial public offering, after payment to holders of Act II common stock that seek redemption in connection with the transactions and net of certain other expenses.

NOTABLE CONDITIONS TO TERMINATION

  • By either the Sellers or the Purchaser, if the Closing shall not have occurred on or before June 30, 2020

BOARD

  • Following the closing, it is expected that Whole Earth Brands will be led by Flavors Holdings’ existing management team, including Chief Executive Officer, Albert Manzone, and President of the Ingredients business, Lucas Bailey.
  • Mr. Manzone has more than 25 years of experience in the consumer products industry and has been with Flavors Holdings since 2016.
  • Mr. Bailey currently serves as President of MAFCO and has 15 years of experience in operational, financial and strategic planning and analysis roles.
  • Irwin D. Simon, Executive Chairman of Act II, will serve as Executive Chairman of the combined company.

ADVISORS

  • DLA Piper LLP (US) served as legal advisor to Act II for the transaction
  • Goldman Sachs & Co. LLC and Moelis & Company LLC served as financial advisors to Act II
  • Cantor Fitzgerald & Co. served as capital markets advisor to Act II
  • Wachtell, Lipton, Rosen & Katz served as legal advisor to Flavors Holdings
  • Citi acted as financial advisor to Flavors Holdings.
  • BTIG acted as capital markets advisor to MacAndrew & Forbes.

 

ACT II GLOBAL MANAGEMENT & BOARD

Executive Officers

John Carroll, 59
Chief Executive Officer & Director

Mr. Carroll has more than 30 years of business experience with consumer products businesses. He spent the last 14 years in various positions of increasing responsibility at Hain Celestial until July 2018, having joined as Executive Vice President and President of Grocery, which generated over $400 million in net sales in 2004. With each successive year at Hain Celestial, he gained additional responsibilities including the Snacks business in 2005, the Personal Care business in 2006, Celestial Seasonings in 2008, and The Greek Gods brand in 2010, followed by Hain Celestial Canada in 2015, culminating in his service as Executive Vice President Global Brands, Categories and New Business Ventures from 2017 through July 2018. Under his leadership Hain Celestial United States grew to over $1.3 billion in net sales through profitable organic growth and strategic bolt-on acquisitions. Prior to this he was Managing Director, Heinz Frozen Foods at the H. J. Heinz Company, a global food company, where he served in various positions of increasing responsibility, starting with marketing and ultimately assuming the responsibility of Managing Director of Heinz Frozen Foods, from 1995 until 2003. He also worked in marketing positions at The Hershey Company and Church and Dwight Co., Inc., where he earned two Effie Awards for the launch of Arm & Hammer toothpaste and was recognized by Ad Age in the Marketing 100 for 1992.

Ira J. Lamel, 71
Chief Financial Officer

Mr. Lamel has over 40 years of experience in finance and accounting. He currently serves as a Director of Novanta Inc., (NASDAQ:NOVT) a leading global supplier of core technology solutions for medical and advanced industrial original equipment manufacturers. Mr. Lamel was Senior Advisor to the Chief Executive Officer of Hain Celestial from 2013 to 2014 and Executive Vice President and Chief Financial Officer of Hain Celestial from 2001 to 2013. Previously, Mr. Lamel was an audit partner in the New York area practice of Ernst & Young LLP. He retired from Ernst & Young LLP after a 29-year career. Mr. Lamel brings to us extensive financial, accounting and auditing expertise, including an understanding of accounting principles, internal controls, financial reporting rules and regulations and financial reporting processes as well as due diligence and accounting for acquisitions acquired over the course of his career.

Mary Celeste Anthes, 60 [Resigned 3/30/20]
Senior Vice President, Business Development and Investor Relations

Ms. Anthes has more than 30 years of experience in the consumer and financial sectors. She spent the last 14 years at Hain Celestial, most recently as Senior Vice President, Corporate Relations since 2011 with responsibility for Corporate Communications and Investor Relations. She began her career at Hain Celestial in 2004 as Vice President, Investor Relations. She also administered its worldwide Human Resources from 2005 to 2006 and 2009 through 2011. Prior to joining Hain Celestial, Ms. Anthes worked in the financial sector in investment banking and asset management where she was Managing Director at Morgan Schiff & Co., Inc., from 2000 to 2004, Administrative Partner at Maxima Group, LLC from 1997 to 2000, and Crystal Asset Management Group, Ltd. From 1990 to 2000 and Senior Vice President of Drexel Burnham Lambert from 1980 to 1990. Ms. Anthes is an experienced corporate communications leader with strong communications, organizational and strategic skills.

Ashish Gupta, 38
Vice President, Business Development and Strategic Planning

Mr. Gupta has more than 10 years of experience in strategy, M&A, operations and restructuring. In 2018, he served as an advisor to Matlin & Partners Acquisition Corp. (NASDAQ: MPAC), a special purpose acquisition company, or SPAC, that consummated a business combination with U.S. Well Services, Inc. a Houston-based provider of hydraulic fracturing services and electric-powered fracturing technology in 2018. Prior to this, from 2012 to 2017, he served as Vice President at Quinpario Partners, an industrials-focused fund, where he worked on two SPAC business combinations: Quinpario Acquisition Corp.’s (Nasdaq: QPAC) 2014 business combination with Jason Incorporated, an industrial manufacturing company with four business segments: seating, finishing, acoustics and components and Quinpario Acquisition Corp. 2’s (Nasdaq: QPAC) 2017 business combination with SourceHOV LLC, a global transaction processing services and enterprise information management provider and Novitex Enterprise Solutions, Inc., a managed services provider offering mail, print, communications and back office solutions. Previously, Mr. Gupta Served as Vice President at Jason Industries from 2016 to 2017, where his responsibilities included cost take-out, supply chain and 80/20 optimization. From 2010 to 2012, he served as a strategy and business development manager at Solutia, Inc., (NYSE: SOA), a specialty materials and chemical manufacturer which was acquired by Eastman Chemical Company in 2012. Since 2018, Mr. Gupta has been a registered representative with Watermill Institutional Trading. Mr. Gupta brings a deep understanding of SPAC dynamics from formation, fund-raising and deal sourcing through execution as well as experience across a range of industries.

 

 

Board of Directors

Irwin D. Simon, 60
Executive Chairman of the Board

Mr. Simon has more than 30 years of business experience in many domestic and international leadership and operating roles. Mr.Simon founded The Hain Celestial Group, Inc. (NASDAQ: HAIN) in 1993, which went on to become a leading organic and natural products company with a mission to be the leading marketer, manufacturer and seller of organic and natural, better-for-you products, committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes. As Founder, President, Chief Executive Officer and Chairman, he led Hain Celestial for more than 25 years and grew the business to $3 billion in net sales with operations in North America, Europe, Asia and the Middle East until November 2018, and as a Director until December 2018. Prior to Hain Celestial, Mr. Simon was employed in various marketing and sales positions at Slim-Fast Foods Company, a dietary supplement foods company, and The Häagen-DazsCompany, a frozen dessert company, which became a division of Grand Metropolitan, a multi-nationalluxury brands company, where his responsibilities included managing the franchisee system and company-owned retail stores. In the last five years he has served as Chairman of the Board of Aphria Inc., (NYSE: APHA) a global cannabis company (where in February 2019 he was appointed interim Chief Executive Officer, to serve in such capacity until Aphria’s Board of Directors identifies a permanent replacement), Presiding Director at MDC Partners Inc., a provider of marketing, activation and communications solutions and services, a Director of Barnes & Noble, Inc., (NYSE:BKS) a large retail bookseller and a Director of Chop’t Creative Salad Company, a fast-casual dining company. Previously, he served as a Director of Jarden Corporation, a consumer products company, until its merger with Newell Rubbermaid Inc.

Anuraag Agarwal, 44
Director Nominee

Mr. Agarwal is Group Head of Business Development, Strategy and Mergers & Acquisitions at Future Group, a consumer-oriented conglomerate with interests in retail, consumer brands, food parks, manufacturing, logistics, data sciences, media, insurance and financial services, whose few public limited companies are listed on the National Stock Exchange and Bombay Stock Exchange in India. Mr. Agarwal has been actively involved in structuring, and overseeing Future Group’s international joint ventures, partnerships and alliances and is a member of the board of directors of some of its existing and former joint ventures and alliances, including those with The Migros Group in Switzerland, Hain Celestial, 7-Eleven, Inc. and Staples, Inc. in the United States, Fonterra Co-operative Group Limited in New Zealand and Clarks in the United Kingdom. He has also helped spearhead, directly and through board participation, various investment transactions of Future Group in the consumer and digital space. Additionally, since 2017, Mr. Agarwal has been the interim Chief Executive Officer of Amar Chitra Katha Private Limited, an Indian comic book company. Prior to joining Future Group in 2012, Mr. Agarwal was an investment banker focusing primarily on mergers and acquisitions, restructuring, private placements and principal investments, initially at Donaldson Lufkin and Jenrette and then for more than ten years at Berenson & Company, a boutique investment bank. During this time, he was actively involved in executing transactions of a variety of sizes across a wide range of industries including consumer goods, financial services, infrastructure, manufacturing, media, retail, utilities, and technology.

John M. McMillin, 65
Director Nominee

Mr. McMillin is a Limited Partner with Lord Abbett & Co., LLC, an independent, privately-held money management firm including mutual funds, institutional and managed accounts, a position he has held since October 2018. From 2007 to 2018, Mr. McMillin was a Partner, conducting equity research covering approximately 70 for large and mid-cap companies in the consumer staples sector in the United States. Mr. McMillin was also Managing Director and Senior Food Analyst at Prudential Equity Group and Prudential Securities from 1985 to 2007 where he was inducted into The Wall Street Journal “Best on the Street” Stock Picking Hall of Fame in 1996. From 1978 to 1980, Mr.McMillin worked in the securities industry at Sterling Grace & Co., and from 1981 to 1985 at Mabon Nugent, Philips, Appel & Walden.

Desirée Rogers, 65
Director Nominee

Ms. Rogers is the Chairman of Choose Chicago, the tourism agency for the city of Chicago, a position she has held since 2013. Since 2019, Ms. Rogers has also been the Chief Executive Officer of One Brown Girl, LLC. a holding company investing in minority-owned ventures. From 2010 to 2017, Ms. Rogers served as the Chief Executive Officer of Johnson Publishing Company, LLC, a publishing and cosmetics firm geared to the African American market. During the period from 2009 to 2010, Ms. Rogers was a Special Assistant to the President and Social Secretary for President Barack Obama. Prior to these roles, Ms. Rogers was the President of Allstate Financial Social Network, a personal lines property and casualty insurer from 2008 to 2009 and the President of Peoples Energy, the natural gas utility in Chicago from 2004 to 2008. Ms. Rogers has served on the boards of MDC Partners Inc. (NASDAQ: MDCA) and Inspired Entertainment, Inc. (NASDAQ: INSE). She is a member of the board of directors for World Business Chicago, The Commercial Club, The Economic Club of Chicago, Donors Choose and Cradles to Crayons. In 2015, WWD named Ms. Rogers one of The 50 Most Influential People in the Multicultural Market.

ByRoman Developer