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Yucaipa Acquisition Corporation

Yucaipa Acquisition Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: SIGNA Sports United

ENTERPRISE VALUE: $3.23 billion
ANTICIPATED SYMBOL: SSU

Yucaipa Acquisition Corporation proposes to combine with SIGNA Sports United, a global leader in four online e-commerce categories: Bike, Tennis, Outdoor and Team Sports. The combination also includes the acquisition of the WiggleCRC Group (“WiggleCRC”), one of the largest online bike retailers globally.

The combined entity will become one of the largest pure-play sports e-commerce and technology platform company, with expected net revenues of approximately $1.6 billion in the financial year ending in September 2021, serving over 7 million active customers, 1,000+ brand partners, 500+ connected retail stores, and more than 15 million sports community users globally.

SUBSEQUENT EVENT – (8-K LINK)

  • On December 4, 2021, Yucaipa entered into Subscription Agreements with PIPE Investors, pursuant to which, and on the terms and subject to the conditions of which, such PIPE Investors have agreed, in connection with the transactions contemplated hereby, to subscribe for and accept TopCo Ordinary Shares for a PIPE Investment amount of at least $397,000,000 (such amount, the “Committed PIPE Investment Amount”).
  • As of the date of this Agreement, the Subscription Agreements are in full force and effect with respect to and binding on Yucaipa and, to the knowledge of Yucaipa, each PIPE Investor party thereto, in accordance with their terms.
  • In addition, and in connection with the additional equity commitment by Bridgepoint, SISH has also agreed to subscribe for an additional equity amount of $25 million through the issuance of TopCo Ordinary Shares (2,500,000 Company Ordinary Shares at a price of $10 per share), providing the Company with additional liquidity of $100 million in total following the completion of the Business Combination.
  • The Redemption Offset Agreement entered into by and among the Company, SISH and Bridgepoint dated October 15, 2021 (the “Redemption Offset Agreement”), pursuant to which, among other things, the parties to the Redemption Offset Agreement agreed to offset redemptions by the public shareholders of Yucaipa that occur above a certain level, remains in full force and effect.
  • SISH’s investment increases the overall PIPE Financing commitments to a total of $397 million.

SUBSEQUENT EVENT – (8-K LINK)

  • On October 15, 2021, SSU has entered into an additional $70 million (7,000,000 TopCo Ordinary Shares at a price of $10.00 per share) of subscription agreements for the financing of its PIPE with Tier 1 institutional investors and sovereign wealth funds as well as ultra-high net worth individuals.
  • Following this additional investment, the total expected PIPE proceeds will increase from $302 million to $372 million.
  • The proceeds from the PIPE upsizing will be used to complete the acquisition of WiggleCRC as well as provide additional capital to fund strategic growth initiatives.
  • Also on October 15, 2021, SSU signed a Redemption Offset Agreement (“Agreement”) with Bridgepoint and SIGNA International Sports Holding GmbH, SSU’s controlling shareholder and member of the SIGNA group, providing for up to $178 million of additional liquidity, if necessary, in the event of elevated redemptions by YAC public shareholders.
  • The backstop would be comprised in part by dollar-for-dollar increases in the PIPE (over and above the PIPE upsizing) for corresponding dollar increases in redemptions as well as, in remaining part by the exchange of cash consideration owed to the WiggleCRC Sellers into the equity of SIGNA Sports United B.V., a Dutch private limited liability company and wholly-owned subsidiary of SSU (“TopCo”).
  • With the implementation of this backstop, the Agreement is expected to provide a minimum level of liquidity to the pro forma Company across all potential YAC public shareholder redemption levels.

TRANSACTION

  • The transaction is expected to deliver up to approximately $645 million of gross proceeds through the contribution of up to $345 million of cash held in YAC’s trust account (assuming no redemptions) and a concurrent fully committed ordinary share PIPE of approximately $300 million (upsized from an envisaged PIPE of $250 million).
  • Ron Burkle is investing $50 million in the PIPE and is joined by top tier global institutional investors. The existing shareholders have agreed to convert 100 per cent of their ownership stakes into the new public company.

yucaipa trans overview

PIPE

  • On October 15, 2021, SSU has entered into an additional $70 million (7,000,000 TopCo Ordinary Shares at a price of $10.00 per share) of subscription agreements for the financing of its PIPE with Tier 1 institutional investors and sovereign wealth funds as well as ultra-high net worth individuals. Following this additional investment, total expected PIPE proceeds will increase from $302 million to $372 million.
  • The proceeds from the PIPE upsizing will be used to complete the acquisition of WiggleCRC as well as provide additional capital to fund strategic growth initiatives.
  • A fully committed upsized PIPE of approximately $300 million anchored by Ron Burkle, top-tier global institutional investors and sovereign wealth funds.

EARNOUT

  • Concurrently with the execution of the Business Combination Agreement, TopCo, SISH and Yucaipa have entered into an earn-out agreement (the “Earn-Out Agreement”)
    • TopCo will issue or cause to be issued to SISH 51,000,000 new Ordinary Shares of TopCo that will vest (in whole or in part) upon, among other things, the achievement of certain earn-out thresholds prior to the fifth year anniversary of the Closing, on the terms and subject to the conditions set forth in the Earn-Out Agreement, in each case, on the terms and subject to the conditions set forth therein.

BACKSTOP AGREEMENT

  • On October 15, 2021, SSU signed a Redemption Offset Agreement (“Agreement”) with Bridgepoint and SIGNA International Sports Holding GmbH, SSU’s controlling shareholder and member of the SIGNA group, providing for up to $178 million of additional liquidity, if necessary, in the event of elevated redemptions by YAC public shareholders.
  • The backstop would be comprised in part by dollar-for-dollar increases in the PIPE (over and above the PIPE upsizing) for corresponding dollar increases in redemptions as well as, in remaining part by the exchange of cash consideration owed to the WiggleCRC Sellers into the equity of SIGNA Sports United B.V., a Dutch private limited liability company and wholly-owned subsidiary of SSU (“TopCo”). With the implementation of this backstop, the Agreement is expected to provide a minimum level of liquidity to the pro forma Company across all potential YAC public shareholder redemption levels.

LOCK-UP

  • Concurrently with the execution of the Business Combination Agreement, the Pre-Closing SSU Shareholders other than the lenders under the Convertible Loan Agreements that will become Pre-Closing SSU Shareholders following the conversion of the loans granted to SSU as described above, and the sellers in the Wiggle Acquisition who receive equity as consideration will enter into lock-up agreements, pursuant to which they will agree not to effect any sale or distribution of any equity securities of TopCo issued to them at the closing of the Business Combination until the date that is 180 days after the closing of the Business Combination (each, a “Lock-Up Agreement”).

NOTABLE CONDITIONS TO CLOSING

The obligation of Yucaipa, TopCo, SSU, Merger Sub and SISH to consummate the Business Combination is subject to certain closing conditions:

  • The required approval of Yucaipa’s shareholders
  • The Wiggle Acquisition being consummated simultaneously with closing
  • Cash in trust cannot be less that $522 million, after deducting any unpaid or contingent liabilities of Yucaipa

ADVISORS

  • Citi acted as lead financial advisor to SSU.
  • Moelis & Company LLC acted as lead financial advisor to YAC.
  • Jefferies acted as capital markets advisor to YAC.
  • Citi and Jefferies LLC acted as co-placement agents on the PIPE.
  • Skadden, Arps, Slate, Meagher & Flom LLP acted as lead legal advisor to SSU.
  • Kirkland & Ellis LLP acted as lead legal advisor to YAC.

MANAGEMENT & BOARD

Executive Officers

Ronald W. Burkle, 67
President & Chairman

Mr. Burkle is Managing Partner of The Yucaipa Companies, a private investment firm, which he founded in 1986. Mr. Burkle currently serves as Chairman of the Board of Soho House Holdings, Ltd., a group of members-only clubs and restaurants with locations all over the world, and The Ned, a 5-star 252 room luxury hotel located in the City of London. Mr. Burkle has served as Chairman of the Board and controlling shareholder of numerous companies in the retail, logistics and hospitality sectors including Pathmark Stores (NASDAQ: PTMK), Ralphs Supermarkets, Americold Realty Trust (NYSE: COLD), Eimskip Logistics (ICE: EIM), TDS Logistics, and Morgans Hotel Group (NASDAQ: MHGC). Mr. Burkle also owns or is a major investor in several companies in the entertainment industry, focusing on movie, television, music, sports and live events (concerts/festivals). These companies include European film and television agency—Independent Talent Group, U.S. and European music agencies—Artist Group International, Paradigm Agency UK and X-Ray Touring, and U.S. and Europe-based music festival operators Danny Wimmer Presents and Primavera Sound. Mr. Burkle also controls Independent Sports & Entertainment, a major sports agency. Mr. Burkle has also served as a director of several other public companies including Occidental Petroleum Corp. (NYSE: OXY), Yahoo! Inc. (NASDAQ: YHOO), and KB Home Corporation (NYSE: KBH). In 2010, Mr Burkle, along with partners Ashton Kutcher and Guy Oseary, formed A-Grade Investments, a venture capital firm established to invest in technology start-up companies including Airbnb, Uber, Spotify and Warby Parker. Mr Burkle is also co-owner of the NHL hockey team Pittsburgh Penguins with partner Mario Lemieux. Mr. Burkle is Co-Chairman of the Burkle Center for International Relations at UCLA and is broadly involved in the community. He is a member of the Board of The Scripps Research Institute and is a trustee of AIDS Project Los Angeles (APLA). Mr. Burkle was the Founder and Chairman of the Ralphs/Food4Less Foundation and the Fred Meyer Inc. Foundation. He was a member of the board the J. Paul Getty Trust, the Los Angeles County Museum of Art, The John F. Kennedy Center for the Performing Arts, The Music Center and the Museum of Contemporary Art, The Carter Center, the Frank Lloyd Wright Building Conservancy and the National Urban League.

Ira Tochner, 58
Chief Financial Officer and Chief Operating Officer

Mr. Tochner is a Senior Partner at The Yucaipa Companies, which he joined in 1990. Mr. Tochner has been involved in all aspects of portfolio company ownership, including mergers and acquisitions, financings, portfolio company monitoring, strategic planning, labor relations, executive recruiting, asset dispositions, and public company reporting. Mr. Tochner currently serves as a director of O’Gara Coach Company, Aquahydrate Water Company, and YC Holdings. During his tenure at Yucaipa, Mr. Tochner has served on the board of directors of Americold Realty Trust (NYSE: COLD), Pathmark Stores (NASDAQ: PTMK), Dominick’s Supermarkets (NYSE: DFF), Fresh & Easy Stores, Golden State Foods, Wild Oats Marketing, Aloha Airlines, and TDS Logistics. Prior to joining The Yucaipa Companies, Mr. Tochner was employed by Arthur Andersen & Co. as an audit manager from 1983 to 1989. Mr. Tochner holds a Bachelor of Science in Business and Accounting from the University of Southern California.

 

Board of Directors

Christel Sicé, 44
Director

Ms. Sicé has been an Executive with Steve Harvey Global since 2017, responsible for all areas of company operations including the investing division, Harvey Ventures. Steve Harvey Global, creates and distributes original, powerful entertainment, content and products that inspire the world. Ms. Sicé currently serves on the board of directors of Anthem Sports & Entertainment. Ms. Sicé previously worked at The Yucaipa Companies from 2002 to 2014 as a Director, managing all aspects of the investment and portfolio management process. Prior to joining The Yucaipa Companies, Ms. Sicé worked at Arthur Andersen LLP as a Transaction Advisory Manager from 1998 to 2002. Ms Sicé holds a Bachelor of Arts in Economics from the University of California at Berkeley.

Yusef Jackson, 49
Director

Mr. Jackson is the Executive Director of the Jackson Foundation, a 501(c)(3) charitable organization that provides for underprivileged students to pursue education, arts and athletics. Mr. Jackson also serves as Secretary for the Rainbow Push Coalition, a leading civil rights organization. After practicing corporate law at the law firm of Mayer Brown and Platt, from 1996 to 1999, Mr. Jackson acquired River North Sales and Service, and turned it into a leading beverage solution company in Chicago. During his leadership and expansion of River North Sales and Service, Mr. Jackson spearheaded the acquisition of dozens of beverage brands and led the design and development of commercial real estate development projects related to the warehousing sales, marketing and administration of the company. In 2006, Mr. Jackson acquired Radar Magazine, a niche media company specializing in witty au courant analysis, opinions and perspectives of modern day pop culture. Under his leadership, Radar Magazine acquired a team of talented writers many of whom have gone on to be industry leaders. Mr. Jackson is a graduate of University Virginia with a BA in Government and Foreign Affairs. In 1996, Mr. Jackson earned his JD from the University of Virginia School of Law. Mr. Jackson is a member of the Economic Club of Chicago, the Chicago Bar Association and serves as a director of the Chicago Children’s Choir, the Virginia Athletic Foundation and Rocket Wagon Ventures.

Tom Dahlen, — [Appointed 8/3/21]
Director

Tom Dahlen is an executive with 50 years of experience in the food industry including senior leadership roles across sales, marketing, procurement, advertising, operations, manufacturing, supply chain and logistics. In addition to his operational experience, Mr. Dahlen has a long history of leading mergers, acquisition integrations and overall best practices for transactions. Most recently, Mr. Dahlen was appointed as Executive Advisor to Co-Protect Global and CSO for Swiftly Systems. In the past, Mr. Dahlen has held positions including interim CEO for both Pathmark Stores and A&P Grocery Stores, EVP of both Ralphs Grocery Company and Alpha Beta Stores, President of Food 4 Less Foods Co, Foods Company Markets and Fleming Retail Group, Chairman/CEO of Furrs Supermarkets, and CEO of Wild Oats. Mr. Dahlen is also a past President of the Food Industry Circle for the City of Hope and Vice President of MDA. Mr. Dahlen’s past and current board affiliations include Wild Oats, Premio Foods, Jana Water USA, Zacky Farms, Foods Company Markets, Furrs Supermarkets and Homeland Foods. Mr. Dahlen previously served as an Operating Partner at The Yucaipa Companies at various points over the last 25 years.

ByRoman Developer