Legacy Acquisition Corp (LGC.U) made headlines in 2017 when it announced the successful closing of its initial public offering (IPO).
As a special purpose acquisition company (SPAC), Legacy Acquisition Corp entry into the public market marked a significant milestone for the company and attracted the attention of investors interested in the sectors it targeted.
What is Legacy Acquisition Corp?
Legacy Acquisition Corp was established with a clear focus on facilitating mergers, capital stock exchanges, asset acquisitions, stock purchases, and reorganization or similar business combinations with one or more businesses.
While the company did not limit itself to a specific industry, its primary focus was on identifying businesses in the consumer sector that showed potential for growth and innovation.
Did LGC.U Have Its IPO in 2017? The Launch Details
The IPO was launched in November 2017, with Legacy Acquisition Corp offering 30,000,000 units at a price of $10.00 per unit.
This strategic move was aimed at raising capital to support its business combination objectives.
Each unit consisted of one share of the company’s Class A common stock and one warrant to purchase one share of Class A common stock, highlighting an opportunity for investors to engage with the company’s growth journey.
Market Response and Performance
The market’s response to Legacy Acquisition Corp IPO was positive, reflecting investor confidence in the company’s strategic direction and potential for future growth.
The pricing of the IPO at $10.00 per unit was seen as an attractive entry point for many investors, looking to capitalize on the opportunities presented by the company’s focus on the consumer sector.
Impact on Legacy Acquisition Corp
The funds raised from the IPO were earmarked for pursuing the company’s primary goal of identifying and completing a business combination.
This capital infusion was critical in providing Legacy Acquisition Corp with the financial flexibility to negotiate and close deals that could drive long-term value for shareholders.
Onyx Enterprises
Legacy Acquisition Corp has completed at least one significant business combination since its IPO. The significant transaction was with Onyx Enterprises Int’l Corp. This merger was completed in November 2020
Onyx Enterprises runs an online platform for automotive parts and accessories, so this merger extended Legacy Acquisition Corp’s presence into the digital marketplace within the automotive industry.
Evaluating the impact on the company’s growth and market positioning, this business combination likely enhanced Legacy Acquisition Corp’s opportunities for growth and market reach.
The integration of Onyx’s digital marketplace platform within the company’s business portfolio allows Legacy Acquisition Corp to tap into the expanding e commerce market in the automotive industry, opening the path for potential growth in terms of both market share and revenues.
Special Purpose Acquisition Companies
Special Purpose Acquisition Companies (SPACs) represent a unique mechanism in the financial world, providing an alternative route to taking a company public.
This discussion will delve deep into the SPAC model, as exemplified by Legacy Acquisition Corp, and how it functions in the market.
What is a SPAC?
Definition and Structure
A SPAC is a type of company with no commercial operations that is formed strictly to raise capital through an IPO for the purpose of acquiring an existing private company.
Often referred to as “blank check companies,” SPACs have been around for decades but have recently seen a resurgence in popularity.
The Initial Public Offering
During its IPO, a SPAC typically offers units (consisting of shares and warrants) at a standard price of $10.
The funds raised are placed in an interest-bearing trust account. These funds are used later to complete an acquisition—usually of one or more unspecified businesses or assets.
The SPAC Merger Process
Target Acquisition
Once the IPO funds are raised, the SPAC has a specified timeframe, usually 18-24 months, to identify and acquire a target company. If the SPAC fails to complete an acquisition within this timeframe, it must return the funds to investors, and the SPAC is liquidated.
Due Diligence and Acquisition Agreement
After identifying a prospective target, the SPAC performs due diligence to ensure the target company’s suitability and potential for success as a public entity. If deemed appropriate, the parties negotiate and sign a definitive agreement.
The acquisition deal must be approved by the SPAC’s shareholders. After approval, the transaction closes, and the target company becomes a public entity, usually assuming the SPAC’s place in the stock market.
Advantages of SPACs
Benefits for Investors
SPACs offer investors a unique opportunity to invest in private equity type transactions, typically reserved for sophisticated investors.
The structure of a SPAC also generally allows for an investor exit option before a business combination is completed, providing a layer of security for their investment.
Benefits for Target Companies
For private companies, merging with a SPAC enables them to become publicly traded without undergoing the traditional and often arduous IPO process.
This can significantly shorten the timeline to becoming a public company with access to more capital.
Risks and Considerations
Market Speculation
Investing in SPACs does involve a substantial amount of speculation since investors are essentially placing their trust in the SPAC management’s ability to identify and acquire a profitable target company.
Dilution Risk
The structure of SPACs often leads to considerable dilution for shareholders, particularly with the inclusion of warrants and sponsor ‘promote’ shares that can account for a significant slice of equity post-transaction.
Performance Uncertainty
Even once a target is acquired, the newly public company’s performance is not guaranteed. The long-term success relies heavily on the acquired company’s business model and market conditions.
The Case of Legacy Acquisition Corp
Legacy Acquisition Corp’s SPAC Model
Adopting this model, Legacy Acquisition Corp raised funds through its 2017 IPO with the intention of acquiring a target company, which materialized in the business combination with Onyx Enterprises Int’l Corp in November 2020.
Impact of Business Combination
For Legacy Acquisition Corp, the acquisition of Onyx Enterprises represented a strategic venture into the digital space of the automotive parts industry, elevating the new entity to a broader market presence and the potential for robust growth.
SPACs play an increasingly notable role in today’s financial environment by providing an alternate path for companies looking to enter public markets.
While attractive for the flexibility and potential returns they offer to investors and target companies, SPACs come with a distinct set of risks and considerations that must be thoroughly understood.
Legacy Acquisition Corp’s utilization of the SPAC model reflects these aspects of strategic growth and the complexities embedded in such financial vehicles.
Conclusion
The successful IPO of Legacy Acquisition Corp in 2017 was not just a financial milestone, but also a strategic one.
It provided the company with the capital necessary to pursue its objectives and positioned it favorably in the eyes of potential business combination partners.
Looking forward, Legacy Acquisition Corp’s future seemed bright, with the potential to make significant impacts in the consumer sector through strategic acquisitions and partnerships.
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