Return of the SPAC? Entertainment and sports-focused ESH Acquisition Corp prices $100m IPO
A new sports and entertainment-focused Special Purpose Acquisition Company (SPAC) whose leadership team includes a former Disney executive has priced its IPO in the US at $100 million.
ESH Acquisition Corp’s stock debuted on the NASDAQ on Wednesday (June 14) under the symbol ESHA.U, after offering 10 million shares at a price of $10 per share.
ESH is looking to merge with a business in the music and entertainment, sports or hospitality industries.
That’s according to the blank check company’s registration statement filed with the US Securities and Exchange Commission (SEC).
ESH said in the filing that it, “may pursue an acquisition opportunity in any industry or sector,” but said it intends to capitalize on the experience of its board members in the fields of sports, hospitality or music and entertainment, “including destination and regional theme parks, water parks, concert venues, theaters, cinemas, record labels, music and television streaming services, production companies and publishing houses.” (Bolding MBW’s)
In the company’s prospectus filed back in May 2022, ESH said that it was planning an initial public offering of 30 million shares at $10 per share, which would have given it a value of $300 million, which means that its IPO was priced at one-third of the value it had originally planned for.
“We believe the ‘experience economy’ is positioned for immediate growth and expansion and we plan to identify target companies that are best positioned to take advantage of these macro tailwinds, win market share and become industry outperformers.”
According to ESH’s prospectus, “there continues to be an increasing global demand for both live and streaming sports and entertainment, accelerated by significant pent-up demand following the COVID-19 pandemic and the continued growth of on-line and mobile applications and connectivity”
It adds: “We believe the ‘experience economy’ is positioned for immediate growth and expansion and we plan to identify target companies that are best positioned to take advantage of these macro tailwinds, win market share and become industry outperformers.”
ESH Acquisition is led by CEO and Director James Francis, the founder and former CEO of Chesapeake Lodging Trust and Highland Hospitality.
The company’s Chairperson is Allen Weiss, former President of World Wide Operations for Walt Disney Parks and Resorts.
Christina Francis, President of Magic Johnson Enterprises, is named as Director Nominee.
SPACs saw a boom during 2020-2021, during the pandemic-era run-up in stock prices. Many startup businesses saw them as a faster way to get listed on the stock market, and with less regulatory oversight.
The number of SPAC offerings in the US jumped from 55 in 2019, to 239 in 2020 and 610 in 2021.
However, following the massive increase in their popularity, the SEC tightened the accounting regulations surrounding SPACs in April 2021, causing their popularity to plummet. In 2022, there were a total of 86 SPAC offerings in the US.
The ESH offering is only the 18th SPAC in the US this year, despite it being nearly the mid-point of the calendar year.
The music industry took advantage of the SPAC boom while it lasted, with a number of music companies making their stock market debut via a SPAC merger between 2020 and 2022.
Among them were music rights acquisition company Reservoir, which listed on the NASDAQ in 2021 following its merger with Roth CH Acquisition Co. II. The company was initially valued at $788 million.
Streaming service Deezer listed on the Euronext Paris exchange in 2022, following a reverse merger with I2PO Societe Anonyme in 2022, in a deal that initially valued the company at $1.16 billion.
Lebanon-headquartered, MENA-focused music streaming service Anghami listed on the NASDAQ in 2022, following its merger with Vistas Media Acquisition Company Inc. at an initial value of $220 million.
Voice recognition company SoundHound listed on the NASDAQ in 2022 following its merger with Archimedes Tech SPAC Partners Co., in a deal that initially valued the company at $2.1 billion.
US-based music distributor and wholesaler Alliance Entertainment completed its merger with Adara Acquisition earlier this year, at a valuation of $480 million. The new company is now seeking to be listed on the NASDAQ.
However, a number of music business SPAC deals have fallen through over the last few years, as investors increasingly turned away from these types of mergers.
Liberty Media Acquisition Corporation, which had been set up “to search for a target in the media, digital media, music, entertainment, communications, telecommunications and technology industries,” announced last year that it would be winding down, after failing to find an acquisition target. SPACs typically have two years to purchase a business, or return their capital to investors.
Another music-oriented SPAC, the Music Acquisition Corporation, delisted from the New York Stock Exchange last December, following a shareholder vote to liquidate, with the company having failed to find a business to merge with.
As of early trading Thursday (June 15), shares of ESH were trading at $10.09, up just under 1% from its opening price. ESH expects to close its offering on June 16.
I-Bankers Securities, Inc. and IB Capital LLC are acting as joint book-runners managers for the offering, with Dawson James Securities Inc. acting as co-manager of the offering.
ESH Acquisition Corp. must engage in an initial business combination within 18 months, as per SEC rules.Music Business Worldwide