SPAC ‘Blank Check’ Deals Are Having a Moment

SPAC ‘Blank Check’ Deals Are Having a Moment

SPAC ‘Blank Check’ Deals Are Having a Moment

SPAC ‘Blank Check’ Deals Are Having a Moment

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The specialized deal machines known as blank-check companies — formally “special purpose acquisition companies,” or SPACs — are having a moment, striking ever-bigger takeovers and raising billions in new funds.

First, a primer. SPACs raise money from stock-market investors for the explicit purpose of buying unspecified privately traded companies. (Shareholders in blank-check funds don’t have a say on picking deals.) The targets essentially assume the SPAC listing, transforming them into public companies. If no deal is struck within a certain time, usually two years, the funds are dissolved.

They’re hot commodities now, having last enjoyed a popularity in the 1980s. At least 41 SPACs have gone public so far this year, according to, compared with 59 for all of 2019.

• The hedge fund magnate Bill Ackman added $1 billion to his target for his forthcoming SPAC, Pershing Square Tontine, for a total of $4 billion. That would make it the biggest blank-check fund to date.

Fisker, an upstart electric-car maker, plans to go public by merging with the blank-check fund Spartan Energy, which is backed by Apollo Global Management, in a $2.9 billion deal. Nikola went public last month through another such deal (with VectoIQ, backed by Fidelity and ValueAct).

• The health services company MultiPlan agreed on Sunday to merge with Churchill Capital Corp III, a SPAC created by the high-profile banker Michael Klein, in a deal valued at $11 billion, the biggest blank-check merger to date.

• Richard Branson’s Virgin Galactic space-tourism business and the fantasy-sports site DraftKings both went public last year via blank-check mergers.

For selling companies, SPACs are quicker and easier than staging an I.P.O., which involves wooing prospective investors, S.E.C. document reviews and uncertainty caused by volatile markets. And they’re often more feasible than direct listings, which tend to be better for well-known businesses like Spotify.

• As stock markets remain vibrant, the average I.P.O. for blank-check funds this year has been about $321 million, according to SPACInsider, far more than in recent years.

But there are downsides, The Wall Street Journal notes. SPACs were once associated with stock-market frauds, and investors in blank-check companies don’t get a say in target businesses.

• Sometimes deals don’t happen: Far Point, a SPAC backed by the hedge fund mogul Dan Loeb and Thomas Farley, a former president of the New York Stock Exchange, is urging its investors to reject the $2.6 billion takeover of Global Blue, a tax-free shopping company.


? Our next DealBook Debrief call is on July 16 at 11 a.m. Eastern. Joining us is Maggie Haberman, a star White House correspondent at The Times, to discuss how the Trump administration is balancing election-year concerns with the coronavirus pandemic. She will also take your questions. R.S.V.P. here to join.


More states are reversing reopenings as infection rates soar. California closed indoor operations for restaurants, wineries and movie theaters statewide, and shut bars entirely. The Los Angeles and San Diego school districts — which together have 825,000 students — plan to go online-only this fall. Texas may roll back reopenings as well.

Global growth is taking a big hit. Singapore said today that its G.D.P. plunged 41 percent in the second quarter, when measured at an annual rate, surpassing already gloomy expectations. Britain reported a 1.8 percent G.D.P. gain for May, well below the 5.5 percent that economists had expected.

Analysts on big banks’ financial reports: ?. Citigroup, JPMorgan Chase and Wells Fargo kick off second-quarter earnings season today, and nobody is sure what to expect. At JPMorgan, for example, the range of pre-pandemic profit forecasts tended to be narrow and the bank managed to beat them each quarter. This year, the spreads are enormous: The bank just reported earnings per share of $1.38, in the middle of estimates that ranged from just over 50 cents to $2.65.

George Soros’s nonprofit will invest $220 million in racial equality efforts. The Open Society Foundations will put $150 million into several Black-led racial justice groups and $70 million into local grants to overhaul policing and criminal justice policies.

NBCUniversal officially joins the streaming fight. Its Peacock service, which becomes widely available tomorrow, represents Comcast’s left-field bet on online video: that users will put up with ads and a rerun-heavy library for a low (or no) monthly fee.

A week from now, the Senate Banking Committee is to vote on President Trump’s nominees for the Federal Reserve Board: Judy Shelton and Christopher Waller. Both sat for confirmation hearings in February, but their nominations have been held up since, largely over qualms about Ms. Shelton.

Are Republicans on board? The 12 Democrats on the 25-member committee are asking for another hearing, citing doubts about Ms. Shelton’s “ ability to handle the economic fallout of the coronavirus pandemic.” Some Republicans appeared skeptical of her unorthodox views during her hearing, but now seem ready to advance her nomination, which requires a simple majority vote of committee members, to the Senate floor.

A recap: Misgivings about Ms. Shelton arise from her history of support for returning to the gold standard, past comments on whether America needs a Fed at all and worries about her independence from Mr. Trump, for whom she served as an unofficial adviser. What has raised the stakes is that she has been suggested as a possible successor to Jay Powell — who has had a rocky relationship with the president — as Fed chair.

• The nomination of Mr. Waller, who’s currently the research director at the Federal Reserve Bank of St. Louis and holds more orthodox views, hasn’t generated much pushback.

The gold standard is back in the news. “Let’s go back to the gold standard,” Ms. Shelton wrote in a 2009 op-ed in The Wall Street Journal. Although she tried to distance herself from these views in her confirmation hearing, it remains a defining feature of her career. Ms. Shelton also said she would support a bond-buying program during a serious recession — a hypothetical possibility in February, but now a signature Fed response to the pandemic — “very reluctantly.”

• She enjoys support from the “sound money” crowd, which fears that expansion of the Fed’s balance sheet would stoke inflation and sink the dollar’s value. But many economists think returning to the gold standard is a bad idea, and would have led to far higher interest rates and less flexibility for the Fed. And with gold on a tear in recent months, maintaining a fixed exchange rate based on the metal would present a major challenge.

As many universities prepare for an academic year largely held online, the venture capital firm Contrary Capital wants to persuade student entrepreneurs to work on a start-up instead.

Contrary Capital will offer five teams between $50,000 and $100,000. The only requirements, according to the firm’s founder, Eric Tarczynski, are that a team must commit to a project between September and the spring, and that at least one member must take a year off to work on it. (The program isn’t limited to a particular sector.)

• Teams will also work with Contrary Capital investors, including early employees of Tesla, Facebook, Reddit and more, Mr. Tarczynski said.

The idea grew from a poll that Contrary conducted a month ago, Mr. Tarczynski told Michael. More than half of the 100 students surveyed said they weren’t sure they would go back to school in the fall. That inspired Contrary to roll out the program.

  • Updated July 7, 2020

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

• “We strongly believe that the limiting factor for young people and company formation is bandwidth,” he said. The program is meant to allow students to focus on entrepreneurship, especially at a time when a traditional college experience isn’t widely available.

• One potential focus of the gap-year program, he added, is helping international students who might otherwise be barred from staying in the U.S. under revised visa guidelines.

It isn’t quite like the Thiel Fellowships, the program founded by the investor Peter Thiel that pays young people $100,000 to drop out of school and pursue their start-up dreams. Participants in Contrary’s program don’t have to forswear higher education, but, unlike the Thiel program, they might have to sell some equity to Mr. Tarczynski’s firm.

When the Treasury Department released the details of participants in the $660 billion Paycheck Protection Program last week, analysts pored over the data. It has since become clear that the data is riddled with errors and inconsistencies, making it hard to draw conclusions about the effectiveness of the small-business rescue program.

“This data has already become notorious for its failings,” David Yanofsky writes for Quartz. The most eye-catching errors were the companies, like the scooter start-up Bird, that were listed as loan recipients but said they never applied. Mr. Yanofsky found even more basic errors:

• Data entry goofs, like listing ZIP codes in the city field or the industry code in the ZIP code field. And misspellings — “CHICARGO,” “DALAS,” “MAIAMI” — that made for some mirth on Twitter.

• Listings where the jobs retained because of a loan is “greater than what other official statistics show to be the total number of workers in that industry.” Also, a few loans were listed with a negative number of “retained” jobs.

• More than 190 loans for borrowers listed as a sole proprietorship that said they are retaining 500 jobs each, and more than 60 loans for “self-employed” entities claiming the same.

The big picture: Small businesses are suffering, even with federal help, and renewed lockdown orders are putting many out of business permanently, The Times’s Emily Flitter writes.


• The chip maker Analog Devices agreed to buy a rival, Maxim, for about $21 billion, the biggest U.S. merger this year. (Reuters)

• SoftBank has reportedly hired Goldman Sachs to help it explore sale or I.P.O. for Arm, its semiconductor design division. (WSJ)

• Oatly, the oat-milk maker, sold a $200 million stake to investors including Blackstone, the former Starbucks C.E.O. Howard Schultz and Oprah Winfrey. (WSJ)

Politics and policy

• The monthly U.S. budget deficit reached $864 billion in June as the government tried to combat the economic effects of the coronavirus. (NYT)

• More than five million Americans lost health insurance between February and May, according to a new study, nearly 40 percent more than during the 2008 downturn. (NYT)


• Google’s potential defense against a U.S. antitrust case may lie in a little-noticed document sent to Australian regulators in May. (NYT)

• Silicon Valley is built on serendipity. What happens if everyone works remotely? (Marker)

Best of the rest

• Here are the Deutsche Bank executives who worked with the disgraced financier Jeffrey Epstein. (NYT)

• Want more diversity? Tie it to the C.E.O.’s pay. (NYT)

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